The world’s biggest climate finance coalition has spoken out against the increasingly aggressive political attacks on ESG, after Republican Party threats triggered a mass exodus from a sub-alliance for insurers.

“These political attacks are now interfering with insurers’ independent efforts to price climate risk, which will harm policyholders, main street investors and local economies,” a spokesperson for the Glasgow Financial Alliance for Net Zero told Bloomberg.

The comments follow a string of departures from the GFANZ sub-group, the Net Zero Insurance Alliance. On Thursday, Allianz SE, Axa SA and Scor SE all walked out of the NZIA, following earlier defections by several founding members including Munich Re. People familiar with the firms’ deliberations said the escalating anti-ESG campaign in the US, which this month explicitly targeted insurers, was behind the moves.

The United Nations Environment Programme, which convened the NZIA in 2021, has said the development should be seen “in light of the recent discussions within the United States.” QBE Insurance Group Ltd., Sompo Holdings Inc. and Mapfre SA also have joined the list of defectors from NZIA.

GFANZ, which is comprised of coalitions representing all corners of the finance industry including banks, asset managers and asset owners, signaled that GOP intimidation tacts won’t result in any watering down of its goals.

“Despite these political headwinds, we will continue to support insurers’ efforts to manage climate risk and develop transition plans,” the alliance’s spokesperson said.

The turmoil surrounding NZIA, which at its peak represented about 15% of global insurance premiums, has emerged as a victory for members of the GOP who are determined to wipe environmental, social and governance metrics off the financial map. 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.

Senior members of the GOP have been quick to celebrate the NZIA’s plight. 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.”

Gunther Thallinger, chair of the GFANZ sub-group Net Zero Asset Owner Alliance, says that climate finance groups and their members need to do better at making clear to the wider public exactly how much is at stake.

“All those of us who are working to really fight climate change weren’t successful in providing the story for those who are concerned,” he said in an interview. “There are people out there who indeed think that this is neither a threat nor needs to be worked on, and here we clearly must say our messaging, signaling and narrative needs to improve: we need to reach those people.”

He also said an important part of that message needs to be underscoring the extent to which climate finance can protect against the losses that will inevitably hit businesses and investors that aren’t prepared.

“Investors who continue with the old regime, excluding considerations of the sustainability developments of the economic transformation, they clearly missed a part of the picture,” Thallinger said.

For onlookers, the crisis engulfing the NZIA risks becoming a seminal moment. If the alliance were now to fully implode, it would represent “a huge disappointment for those who wanted a collaborative approach to target-setting,” said Miqdaad Versi, founder of the sustainability practice at Oxbow Partners, a management consultancy focused on insurance, in a LinkedIn post. It would create “a huge hurdle for collaborative efforts in this space,” he said.

Since Munich Re quit the NZIA in late March, citing “material” legal risks, the group has struggled to keep other members from heading for the door. But there are still some of its more prominent signatories who are staying put. And according to the group’s website, it still has roughly 22 members including major names such as Aviva Plc.

A spokesperson for the British insurer said that “the NZIA has played an important role developing the critical standards and frameworks for insurers to meet net zero. We are saddened by recent developments and will work with the UN and other members to seek an orderly resolution. We remain fully committed to pursuing our ambition of becoming a net zero company by 2040.”

What’s more, many of the firms who quit the insurers alliance remain members of the Net Zero Asset Owner Alliance, including Allianz, of which Thallinger is a board member.

“The economic transformation that we are going to see, and that we are already in, is a big macro cycle,” he said. “The next three decades are clearly defined by that transformation.”

Michael R. Bloomberg, the founder of Bloomberg News parent Bloomberg LP, is co-chair of GFANZ together with former Bank of England Governor Mark Carney.

(Adds that Mapfre also is leaving NZIA in fourth paragraph.)