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Today we take a look at how insurance companies have been exiting an alliance focusing on cutting carbon emissions for fear of breaching antitrust laws. And in a change of subject, check out today’s ESG Spotlight to find out if global warming is helping loggerhead turtles settle in the Mediterranean. 

Before we get going though, please note that there will be no Friday edition of the newsletter as I’ll be off enjoying the bank holiday weekend, but it will be back to business-as-usual next week. 

Global companies that form alliances to help them to tackle climate change need clear “safe harbor” guidelines from governments to allay fears they could be tripped up by antitrust rules, legal experts said.

According to Practical Law, “antitrust refers to the regulation of competition in trade and commerce. Competition law is known in the United States and some other jurisdictions as antitrust law and deals with similar issues including unlawful: vertical restraints, horizontal conduct including price fixing and other cartel conduct or collusion involving competitors, and misuse of market power and other monopolistic conduct affecting competition.”

The logo of Zurich Insurance is seen at its headquarters in Zurich, Switzerland January 13, 2022. REUTERS/Arnd Wiegmann

Hundreds of companies have banded together into various groups with pledges to reduce carbon emissions to net zero by mid-century. But there is limited guidance from governments and regulators on how far they can collaborate to reach that goal without overstepping antitrust boundaries.

Zurich Insurance Group said it was quitting an industry grouping of insurers focused on cutting carbon emissions. That followed Munich Re’s unexpected announcement last week that it was leaving the group – the Net Zero Insurance Alliance (NZIA) – to avoid antitrust risks.

The German reinsurer on Friday quit the group less than two years after co-founding the coalition, part of the Glasgow Financial Alliance for Net Zero (GFANZ) umbrella group of sectors pushing to decarbonise.

A spokesperson for Zurich declined to comment on whether antitrust concerns had played a part in its decision to leave, but said the decision was not in response to Munich Re. “It is not something we decided yesterday or Friday but something we have been looking at for quite a while,” a spokesman said.

Last week, a Danish pension scheme said it could quit the Net Zero Asset Owner Alliance because of a perceived lack of ambition among peers, which several sources said stemmed from fears of attracting antitrust lawsuits. The antitrust tensions mark a further setback to GFANZ several months after U.S. asset manager Vanguard pulled out, citing a need to express its own views independently to investors.

Antitrust concerns are at the center of a growing sustainability backlash in the United States led by Republican politicians, and legal experts in the U.S. and Europe have called on regulators to provide more assurances to companies wanting to collaborate to tackle climate change.

Flood victims travel in a boat, following rains and floods during the monsoon season in Talti town in Sehwan, Pakistan September 15, 2022. REUTERS/Akhtar Soomro/File Photo

Nazmeera Moola, chief sustainability officer at global asset manager Ninety One, shares her thoughts on a steady energy transition: 

“Reaching net zero will rely on investment in new green infrastructure as well as investment in decarbonizing high-emitting companies. Both are needed to achieve real-world decarbonization. 

“This is especially true of the five sectors that are responsible for more than 90% of global emissions and are essential for economic growth – power, buildings, mobility, industry, and agriculture. These industries are central to global development. Any disruption to their output will have a significant impact on the global economy. The transition, therefore, must be as orderly as possible.

“As credibility builds and the investment industry learns to assess transition plans, we expect asset owners to become increasingly comfortable with adopting transition-based climate strategies.

“The highest-emitting companies and industries require investors who can own them, challenge them on the credibility of their plans, and hold them to account over time, as they evolve. 

“It is our view that the low-carbon transition will prove Darwinian for many industries in the medium- to long term, but especially to those industries that sit at the crux of the problem. 

“Companies in these economic areas that can successfully make the transition by either developing new technologies or through significant decarbonisation of key industrial processes stand to be rewarded by the market via enhanced access to debt and equity financing and higher market valuations.”

Investment funds with environmental, social and governance (ESG) goals appear to be back in vogue in 2023, although the banking crisis that roiled markets last month removed some of the shine as investors withdrew cash towards the end of the quarter.

Thanks to the rebound in tech shares and other sectors shunned in 2022, ESG equity funds outperformed traditional funds during the quarter. That is in contrast to 2022’s underperformance.

Marine biologist Alejandro Usategui feeds a Caretta Caretta turtle in its pond at the Taliarte Wildlife Recovery Center, Gran Canaria, Spain, March 24, 2023. REUTERS/Borja Suarez

A growing number of loggerhead sea turtles are nesting and laying eggs on western Mediterranean beaches in what some scientists suggest could be a case of climate change causing habitat expansion of a threatened species. Elsewhere, a port in Germany plans to spend more than $5.5 billion to help construct clean energy infrastructure.

Along with the warming sea water, another factor probably benefiting the world’s largest hard-shelled turtle, which is considered a vulnerable species, are protection programs in countries like Spain and Cape Verde.

Marine biologists from France, Italy, Spain and Tunisia have discovered far more nests on the beaches of their respective countries in the past decade than in 1990-2012, when those averaged less than three a year.

Since 2012, nest numbers have increased dramatically, reaching 84 in 2020, the most recent data available, according to a paper released by ecology scientific journal Global Ecology and Conservation last summer.

German Chancellor Olaf Scholz, Economy & Climate Minister Robert Habeck, and Finance Minister Christian Lindner pose during the opening of the LNG terminal in Wilhelmshaven, Germany, Dec 17, 2022. Michael Sohn/Pool via REUTERS

Germany’s only deep water port, home to its largest naval base, is where energy firms now plan to spend more than $5.5 billion to help construct the clean energy infrastructure the country needs to help end its reliance on Russian gas.

Europe’s leading industrial exporter has only just managed to get through an energy crunch by rushing to build makeshift floating infrastructure for importing liquefied natural gas (LNG), aiming to partially plug the gap left by Moscow’s cuts.

“The World Bank already has deep experience providing guarantees to support both public and private investment in developing countries. The whole point of a publicly funded bank is to take risks that the private sector would not, to achieve a goal that carries broad public benefits.”

Michael Bloomberg, UN Special Envoy on Climate Ambition and Solutions

Global Investor

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