Major insurers are withdrawing from the Net-Zero Insurance Alliance, prompted by backlash over ESG issues in the US and fears regarding potential antitrust lawsuits.
Welcome back to the Climate Nexus finance newsletter – a regular update that looks at the big stories and players at the intersection of climate change, finance, regulation, and energy, with tips for the week ahead.
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An uninsurable nation?
Major insurers are withdrawing from the Net-Zero Insurance Alliance, prompted by backlash over ESG issues in the US and fears regarding potential antitrust lawsuits. And some are also leaving states altogether, with Allstate, the fourth-largest property and casualty insurance provider in California, recently ceasing to sell new home, condominium, and commercial insurance policies in the state. Similarly, State Farm, California's largest homeowner insurance provider, has also discontinued offering new policies, underscoring the growing concerns about environmental risks.
In response to the intensifying threats of climate change and natural disasters, insurance companies nationwide are raising their rates, limiting coverage, or stopping operations altogether in vulnerable regions. For instance, in Florida, most of the large insurance firms have departed the state, leaving homeowners with smaller companies and issuers of last resort that may lack sufficient resources to provide adequate protection. These recent decisions by major insurers underscore the growing crisis; if lawmakers do not promptly address these climate-related challenges, the private market will be forced to adapt independently, leaving homeowners at risk.
House Reps x ESG round 2
Tomorrow, House Republicans are holding the second hearing on responsible investing and environmental, social, and governance (ESG) metrics. The majority’s witness panel is composed of fossil fuel operatives and radical climate deniers. Despite a disastrous first full House Oversight and Accountability hearing, where the majority failed to justify the massive costs to state pensions, taxpayers, and consumers or the impacts on businesses of their campaign, it’s likely that House Republicans will double-down on climate denial. The hearing follows a letter endorsed by a coalition of over 300 institutional investors sent by the Interfaith Center on Corporate Responsibility to members of Congress urging them to stop trying to interfere with investors using ESG metrics.
Paris Summit: breakthrough or dull diplo-declarations?
The Paris Summit for a New Global Financial Pact is less than three weeks away and the new website is finally live. Attendees include Mia Mottley, the Prime Minister of Barbados, US Treasury Secretary Janet Yellen, Special Envoy John Kerry, the IMF’s Kristalina Georgieva, and the World Bank’s new President Ajay Banga. Devex has released a possible draft declaration outline which, in its own words, is “peppered with mind-numbing diplo-speak…and predictable development pledges.”
On Banga’s first day as Word Bank president, Eurodad released a pointed analysis, saying the focus on placing the private sector as the key provider of finance is a cause for concern.
Bonn bon-mots and climate bots
The Bonn Climate Change Conference— an annual intersessional meeting between COPs— began today. Key issues include how the new Loss & Damage Fund will work and who’ll fund it, a 2-year UN review of global climate action (the Global Stocktake), accelerating emission cuts (Mitigation Work Programme), and increasing climate finance through the 2020s. On finance, do check out the recent Reuters investigation documenting the gross misuse of the $100 billion pledged for climate finance by wealthy nations in 2009. “Major economies have shown the extent of their abilities in the face of pandemics and wars. But the climate crisis is relegated to being a secondary issue behind their self-interests,” said AOSIS Chair, Ambassador Fatumanava-o-Upolu III Dr Pa'olelei Luteru. But don’t worry, everything is going well with COP28; these very credible, totally not bot accounts told us so.
Kravis to be the skunk at the garden party
Expect fireworks tomorrow at the Museum of Modern Art’s annual Party in the Garden, a protest led by climate change advocates including individuals from frontline communities, the Climate Organizing Hub, New York Communities for Change, and Reclaim Our Tomorrow, planned for 6pm ET. Activists are demanding the museum sever its connections with Board Chair Marie-Josée Kravis and her private equity tycoon husband, Henry Kravis. The couple, major financial backers of MoMA, are under scrutiny due to Henry Kravis' role as Co-Founder and Co-Executive Chairman of Kohlberg Kravis Roberts (KKR), a firm linked to substantial investments in fossil fuels and controversial projects such as the Coastal GasLink Pipeline. The protest calls on MoMA to reject further donations from the Kravis family, intensify efforts to combat climate change, and cut ties with major fossil fuel financiers.