The anti-ESG movement has scored its first major victory, after the world’s biggest climate alliance for insurers started hemorrhaging members, intimidated by Republican Party threats to sue them for alleged antitrust violations.
(Bloomberg) — The anti-ESG movement has scored its first major victory, after the world’s biggest climate alliance for insurers started hemorrhaging members, intimidated by Republican Party threats to sue them for alleged antitrust violations.
On Thursday, the French reinsurer Scor SE became the latest member of the Net Zero Insurance Alliance to walk out, marking the fifth high-profile defection in less than two months. Chief Executive Officer Thierry Leger announced the decision during Scor’s annual general meeting, a spokesperson told Bloomberg by email.
Other insurers have signaled they may also be heading for the door, with the development prompting the NZIA to hold an emergency meeting on Thursday, according to people familiar with the process who asked not to be identified discussing non-public information. The United Nations Environment Programme, which convened the NZIA in 2021, said on Wednesday that the exits should be seen “in light of the recent discussions within the United States.”
Senior members of the GOP have cheered the moment. Utah Attorney General Sean D. Reyes said in a statement that he and his colleagues “are encouraged” to see the departures from “an Alliance that was focused on a radical environmental agenda over the interests of its clients. We will continue to be vigilant and take legal action where necessary to protect Americans from the dangers of ESG.”
The departures from the NZIA, which at its peak represented about 15% of global insurance premiums, now stand out as a key moment the GOP’s campaign to wipe environmental, social and governance metrics off the financial map. Senior members of the Republican Party have attacked ESG as a “woke” movement that they say is anti-American and dangerous to capitalism. They accuse NZIA of potential antitrust breaches and have linked its work to higher insurance costs and gas prices.
Against that backdrop, NZIA has now lost several of its founder members, including Munich Re, the world’s biggest reinsurer. All insurers that have quit the coalition say they’ll continue to target sustainable climate goals, just not as part of the insurance alliance.
“This kind of intimidation is more common in totalitarian regimes then democratic countries and undermines very important sector initiatives badly needed to address the financial costs related to the climate emergency in the US and elsewhere,” said Sasja Beslik, a sustainable finance veteran.
Lawyers following the situation suggest that the GOP’s arguments are unlikely to stand up to scrutiny in the courts. Beslik agrees, and says that firms bowing to GOP pressure risk “losing credibility” with ESG investors.
“It is a total overreaction and depressing to see how little real commitment departing companies have,” he said.
Insurers are reacting to targeted attacks by the GOP, as the party threatens legal action against firms that coordinate their ESG policies. In a May 15 letter, attorneys general representing 23 US states said they were “concerned with the legality” of the NZIA, and linked the alliance to “record-breaking” inflation.
Karl Racine, a former attorney general of the District of Columbia who’s now a partner at Hogan Lovells, says that “while the strength of the legal arguments underlying these claims does not appear to be strong,” the chilling effect of the campaign is real.
NZIA is one of eight sub-groups that make up the Glasgow Financial Alliance for Net Zero. The umbrella organization is co-chaired by Mark Carney, a former governor of the Bank of England, and Michael Bloomberg, the founder of Bloomberg News parent Bloomberg LP.
(Adds comment from Utah AG.)
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