GOP attorneys general go after climate-minded insurers

A group of Republican state attorneys general is probing insurance companies over their involvement in an alleged “activist climate agenda.”

In a letter this week, 22 state attorneys general ask member companies of the Net-Zero Insurance Alliance to provide documentation showing their ESG-related commitments. The same group of Republican attorneys general recently sent similar requests to numerous asset managers and to proxy advisory firms ISS and Glass Lewis. The inquiries are part of a sprawling Republican campaign against the use of environmental, social and governance criteria in investing.

In the letter this week, the attorneys general state that they “are concerned with the legality of [insurers’] commitments to collaborate with other insurers and asset owners in order to advance an activist climate agenda.”

At a House hearing last week that included two of the attorneys general as witnesses, Republicans characterized such commitments as part of a “cabal” of global elites that threatens democracy and national security.

Proponents of ESG use emphasized that the factors on their own are data that can be used to help assess investment risk and opportunity.

While Republican attorneys general are examining the legality of net-zero goals among insurers, they alleged in the recent letter that the pressure for insurance clients to reduce emissions has translated to higher premiums, rising gas prices and “record-breaking inflation.”

The Bureau of Labor Statistics identified three main culprits behind inflation since 2020 — energy price volatility, backlogs resulting from supply-chain issues, and price changes in auto-related industries. Separate pieces of research from the Federal Reserve Bank of Kansas City and the left-leaning Economic Policy Institute have shown that increased corporate profits have also been contributing to inflation.

The UN-convened Net-Zero Insurance Alliance did not immediately respond to a request for comment.

In the letter to insurers, the attorneys general request copies of communications between NZIA and its members that would show the climate commitments they have made. They also ask for “limitations that your commitments have placed on your ability to provide reinsurance” in the U.S. and documentation of efforts to reduce emissions in the companies’ insurance portfolios.

Additionally, the attorneys general want to know if insurers are providing incentives for customers to transition to electric vehicles.

In January, the Net Zero Insurance Alliance started its first target-setting protocol, which requires members to set and disclose their net-zero transition targets by the end of July. That protocol “will enable NZIA members to begin to independently set science-based, intermediate targets for their respective insurance and reinsurance underwriting portfolios in line with a net-zero transition pathway consistent with a maximum temperature rise of 1.5°C above pre-industrial levels by 2100,” the group stated in the announcement earlier this year.

While some insurers were eager to support NZIA from the beginning, firms are increasingly facing pressure in the U.S. from shareholders to address climate change. This week, Chubb and The Hartford have had proxy votes related to fossil-fuel industry underwriting, and Travelers faces one next Tuesday. Companies had similar shareholder resolution on their ballots last year, which marked the first major attempt for investors to target fossil fuels through the insurance industry.

Over the past few months, three insurance companies have walked away from their membership in NZIA: Munich Re, Zurich Insurance Group and Hannover Re.

In its announcement of the exit, Munich Re noted that it's still pursuing its carbon-reduction goal of net-zero by 2050 and a 29% reduction before 2026. The firm will no longer insure new oil and gas projects, but it's no longer part of NZIA in part because it does not want to expose itself to “material antitrust risks,” CEO Joachim Wenning stated.