Opponents of collective climate action have set their sights on a new target: a grouping of major insurers, founded in the run-up to the 2021 UN climate summit held in Glasgow.
Republican attorneys-general from states including Texas, Virginia and Alabama argued in a recent letter to these insurers that the push to “rapidly reduce emissions” had raised insurance costs and fuel prices. This had “result[ed] in record-breaking inflation and financial hardship for the residents of our states”.
A trio of Europe’s biggest insurers, including Axa, the group’s former chair, quit the Net-Zero Insurance Alliance yesterday, following other high-profile departures this month. The Japanese insurer Sompo Holdings also withdrew, saying it would continue to pursue its climate goals “as vigorously” outside the group, as did the Australian insurer QBE.
The trigger? Insurers (and other financial institutions) are worried that hashing out joint climate goals could lead to legal action against them over anti-competitive behaviour. It is worth noting this threat has mostly been put forward by politicians, rather than competition regulators.
On the other hand, campaigners have accused the insurance body of being too weak, given that its members can still underwrite new coal mines and do not have to set decarbonisation targets that cover their clients’ whole value chain.
But the UN Environment Programme Finance Initiative, which convenes the group, issued a sharp warning in response to some of the departures this week: “In order to successfully tackle the climate emergency, there is a fundamental and urgent need for collaboration, not just individual action.” The grouping still had 23 members listed on its website this morning.
Today, Gillian brings us a different perspective from Virginia, where strong local voices spoke out in favour of green energy at a Federal Reserve conference. But first, the UN’s Elizabeth Maruma Mrema tells Simon companies don’t need regulation to get started on nature-related disclosures.
Please note Moral Money will be taking a break on Monday, for the public holidays in the UK and US. See you on Wednesday. (Kenza Bryan)
Elizabeth Maruma Mrema: ‘Companies, don’t be worried’ about nature disclosures
During more than a decade as a senior official at the UN Environment Programme, Elizabeth Maruma Mrema has seen a frustrating lack of progress towards global biodiversity goals — with limited exertion by governments, and still less from the private sector.
So she was taken aback, when helming December’s UN biodiversity summit in Montreal, to see hundreds of major companies pleading for governments to hit them with new regulations around biodiversity. “Where on earth would one have expected business to take that leadership?” Mrema said on Wednesday at our Moral Money Summit.
Mrema — who oversaw the December COP15 conference as the executive secretary of the UN convention on biological diversity — said she was heartened by the unprecedented level of business engagement in the annual meeting. Both governments and companies, she said, had taken lessons from the failings of recent years.
“The global targets we had on biodiversity in the past 15 years — we had 20. And we failed all of them,” Mrema told me. “And one of the reasons for the failure was that the private sector was not engaged in their development, and likewise, in their implementation.”
A significant outcome of COP15 was the international agreement on “Target 15”, which states that all large companies will need to assess and disclose their nature-related risks, impacts and dependencies by 2030. Mrema is at the centre of this drive: as well as being the deputy executive director of UNEP, she co-chairs the Taskforce on Nature-related Financial Disclosures, an initiative to create standards for companies to use for this sort of reporting.
Interestingly — while she strongly backed the push for mandatory disclosures — she struck a cautious note on the pace of movement by governments. While climate-related disclosures have become the norm for large companies in many major markets, far fewer do similar reporting around biodiversity.
One exception is France, where large financial institutions have had to do this since 2021. But Mrema did not urge other countries to rush to follow France’s example on mandatory biodiversity disclosures.
“We need to give time for companies . . . to understand, to build their capacity” to make biodiversity disclosures, she said, while emphasising her hope that mandatory reporting would follow in due course.
The TNFD plans to unveil its final framework for biodiversity reporting in September and Mrema stressed that it was building its approach upon that of the Taskforce for Climate-related Financial Disclosures, which is already widely used by companies around the globe.
“So companies, please don’t be worried,” she said. “When you report for climate, you can simultaneously also report for nature.” (Simon Mundy)
Talking fossil fuels with the Federal Reserve
Last weekend I went down to Richmond, Virginia, for the first time for a Federal Reserve conference with the presidents of the Richmond and Atlanta branches of the US central bank. It was illuminating. As you might expect, there was extensive chatter about the economy, debt ceiling negotiations and inflation targets (key takeaways: in the southern states, there are still scant signs of a recession, or evidence that the Fed can hit its 2 per cent inflation target any time soon).
But what was equally notable was a lively debate about the energy transition. This matters enormously to these two Fed branches, since they cover several big fossil fuel-producing states and collaborate closely with the Dallas Fed branch. And — perhaps unsurprisingly — the conference featured pleas from some local business leaders for the government to keep supporting fossil fuels.
They pointed out that the International Energy Agency did not expect significant declines in oil and gas demand in the coming decades — and argued that America could not abandon its energy self-sufficiency. They also claimed that energy efficiency had surged: pollutants and carbon emissions from the auto sector, say, have apparently dropped 71 and 15 per cent respectively since 1981, even as vehicle miles travelled have risen 114 per cent.
However, there were also strong local voices backing green energy — albeit within a framework that has a mix of energy sources. The Tennessee Valley Authority, a federally owned utility company that serves several southern states, is one example: it is embracing nuclear, solar, hydro, biodiesel and natural gas to generate electricity, alongside controversial coal. And its leaders expect this hybrid approach to continue in the coming years as they try to hit net zero targets without suffering outages.
This stance will not please diehard environmentalists; least of all in California whose senate voted overwhelmingly this week to passed a bill to force its public funds to divest completely from fossil fuels. But this “hybrid” stance captures a wider zeitgeist among many leaders in the American south. Although Texas is infamously central to the oil and gas sector, for example, it is the leading American state in terms of wind power and is about to become the biggest solar power energy producer too. This green record has sparked some local opposition; listen to this excellent podcast for evidence of this. But participants at the Fed meeting seemed to assume that hybrid energy is the only path to the future.
“People want to make money from green, even if they don’t want to talk about oil and gas too much,” one business leader told me. Consider this, if you like, one of the big wins from the Inflation Reduction Act: “renewable” is no longer a term of contempt. (Gillian Tett)
The FT’s Tom Wilson reports on what could prove a historic tipping point: International Energy Agency chief Fatih Birol has said that investment in solar power is set to exceed spending on oil production this year.
Norway’s $1.4tn sovereign wealth fund will back climate-focused shareholder proposals at ExxonMobil and Chevron, adding to pressure on the US oil giants to introduce targets for carbon emissions cuts, Richard Milne reports from Oslo.