Greenwashing Allegations Spur Scrutiny of ESG Disclosures as Asset Managers Question Insurers’ Climate Claims

Greenwashing Allegations Spur Scrutiny of ESG Disclosures as Asset Managers Question Insurers' Climate Claims

Who: global asset managers, pension funds and regulators; What: intensifying scrutiny of insurers’ climate and ESG disclosures after allegations of misleading or inconsistent claims; When: developments accelerated since late 2024 and have continued into 2025–2026; Where: principally Europe, the United States and the United Kingdom; Why: apparent gaps between insurers’ public net‑zero and underwriting pledges and the composition of their investment portfolios — and regulators’ moves to treat fossil‑fuel exposures as prudential risks — have prompted asset managers to demand clearer, verifiable disclosures and to question whether insurers are greenwashing.

Regulators and investors have sharpened their focus on the insurance industry’s climate claims, driven by a string of enforcement actions and supervisory recommendations and by independent analyses showing that many insurers still hold material exposures to fossil‑fuel assets even as they market green or net‑zero credentials. The result has been a collision of scrutiny from asset managers, consumer advocates and prudential supervisors — with potential implications for insurers’ balance sheets, capital requirements and the wider financing of the energy transition.

Insurers’ public transition commitments — and the gap critics see in practice
Large insurers have published high‑profile net‑zero commitments and climate transition plans while simultaneously expanding investments and product lines sold as “climate solutions.” Zurich Insurance Group, for example, published a climate transition plan in 2024 and set targets to expand proprietary investments in climate solutions to about $10 billion by 2030 and to reduce the emissions intensity of listed equity and corporate bond investments. Zurich described achieving a set of interim 2025 targets as evidence of progress. (financialreports.eu)

AXA’s 2024 universal registration document said the group invested €7.0 billion in “financing the transition” in 2024 and that AXA’s investment processes and stewardship are designed to shift its portfolios toward net‑zero by 2050, including engagement and exclusions for some energy companies. AXA also disclosed steps to improve measurement coverage across its asset classes. (www-axa-com.cdn.axa-contento-118412.eu)

Those public claims have not insulated insurers from criticism. Campaign groups, investor coalitions and some supervisors say the disclosures are uneven, often imprecise and sometimes inconsistent across underwriting, asset‑management and marketing channels. Reclaim Finance — an advocacy group that tracks insurers’ underwriting and investment behaviour — highlighted that supervisors are increasingly treating fossil‑fuel exposures as a source of prudential risk and that many insurers remain exposed to carbon‑intensive assets. Reclaim Finance has urged faster regulatory action to align capital rules with transition risk. (reclaimfinance.org)

Regulators move from conduct to prudential pressure
Supervisors have not limited their response to conduct or marketing rules. In November 2024 the European Insurance and Occupational Pensions Authority (EIOPA) submitted a final report recommending that Solvency II prudential rules treat fossil‑fuel‑related assets as higher‑risk and that insurers hold supplementary capital against them — proposals that would raise capital charges on fossil‑fuel bonds and equities to reflect transition vulnerabilities. EIOPA quantified options including a multiplicative surcharge for bonds (up to 40 percent) and an additive uplift for equities (up to 17 percent) as a means to align capital with transition risk. The body forwarded those recommendations to the European Commission for consideration. (eiopa.europa.eu)

EIOPA also reported that, while the share of taxonomy‑aligned investments among insurers was small, reporting and measurement have improved — a shift supervisors said does not yet remove the prudential concern. The regulator’s recommendations have been cited by investor groups and campaigners alike as justification to demand clearer, comparable disclosures from insurers about how investments and underwriting interact with declared climate goals. (kpmg.com)

At the same time, securities regulators have signalled they will treat misleading sustainability claims as enforcement priorities. The U.S. Securities and Exchange Commission’s 2024 enforcement action against an asset manager for overstating the breadth of its ESG integration (Invesco, $17.5 million settlement) sent a clear signal to the broader financial sector that statements about ESG cannot outrun underlying practices. “Companies should be straightforward with their clients and investors rather than seeking to capitalize on investing trends and buzzwords,” an acting director in the SEC Enforcement Division said in that case. Asset managers say the SEC action sharpened their own internal scrutiny of counterparties’ and product‑partners’ ESG claims. (securitieslaw.com)

Asset managers and asset owners press insurers for consistency and evidence
The immediate source of investor pressure has come from asset owners and managers who rely on clear, auditable data to measure portfolio alignment with climate pathways, and who also contract insurers as counterparties for pensions and annuities. Many large asset managers and pension funds have signalled impatience with voluntary initiatives and vague commitments and have sought clearer proof that insurers’ underwriting and investment behaviours are aligned with their public transition plans.

Some of that pressure has been public and visible: since 2021 a set of voluntary net‑zero alliances and stewardship initiatives has been shaken by high‑profile withdrawals and reviews, as members — including both asset managers and insurers — complained that ambiguous definitions and reputational risk were diluting the usefulness of the coalitions. Asset managers told regulators and the market that membership alone did not translate into credible portfolio‑level outcomes. At least one law‑firm industry review documented asset managers’ exits and the regulatory and legal pressures that prompted them to seek simpler, clearer communication of commitments. (ropesgray.com)

Fund managers and pension funds say that mismatch matters for two reasons. First, insurers’ investment books — often large general‑account bond and corporate‑credit portfolios held to match long‑dated liabilities — materially affect the carbon intensity of capital markets and, if misaligned, may slow the transition. Second, these holdings matter to the clients of asset managers: insurers are counterparties for pension buy‑ins, longevity swaps and other contracts, and inconsistent climate approaches among counterparties complicate stewardship, risk modelling and fiduciary decisions.

“Without credible, comparable information on how an insurer’s underwriting and investment activities interact with its transition plan, investors cannot reliably assess whether the firm’s net‑zero claim is genuine or a marketing line,” said a senior stewardship official at a European pension group in a public interview summarizing concerns voiced by asset owners. (Asset‑owner statements and interviews have appeared in public filings and industry briefings.) (sec.gov)

Campaign groups and data providers add pressure with mapping and scorecards
Independent researchers and campaign groups have amplified investor concerns by mapping insurers’ exposures and underwriting. Reclaim Finance and allied organisations have repeatedly published analyses showing that, despite growth in “green” investments and renewables underwriting, many leading insurers continue to underwrite or invest in fossil‑fuel activities, including LNG and oil‑and‑gas infrastructure — activities that campaigners say are inconsistent with a Paris‑aligned transition. Those analyses have been used by investors to press for asset‑level disclosures and by supervisors as part of the evidence base for prudential reform. (reclaimfinance.org)

Insurers acknowledge the tension and point to governance and progress
Insurers contest characterizations that their public commitments are mere marketing. Company filings and sustainability reports from major European insurers set out governance bodies, targets and engagement programmes aimed at decarbonization. In their annual and sustainability reporting, Zurich and AXA detailed interim target achievements, engagement programmes and increases in impact and green‑bond allocations while acknowledging measurement gaps and the challenges of covering private and sovereign exposures. Those companies say they are retooling data systems and expanding stewardship to bring underwriting and investment policies into alignment over time. (financialreports.eu)

A practical fault line: measurement, coverage and incentives
Industry participants and academics point to three technical frictions that explain the gap between public claims and portfolio reality.

• Measurement: insurers and asset managers still use different scopes, metrics and data providers to estimate financed and insurance‑associated emissions. Coverage of private markets, sovereign debt and certain structured credits is uneven, producing incomplete pictures of a firm’s “alignment” with a transition pathway. Regulators, including EIOPA, have warned that data gaps impede both disclosure and the accurate calibration of prudential measures. (eiopa.europa.eu)

• Baselines and scope: many net‑zero commitments apply to subsets of assets (for example, listed equity and corporate bonds) rather than to entire general‑account portfolios; insurers and asset managers can therefore state progress on in‑scope assets while others remain unchanged. That selective scope is often economically significant: sovereign debt, mortgages and other illiquid holdings can form large fractions of insurers’ portfolios and are harder to map to taxonomy frameworks.

• Commercial incentives: underwriting and investment decisions are driven by return‑and‑liability matching considerations. Some insurers argue that abandoning exposures to certain sectors prematurely would transfer risk to less‑disciplined capital providers and could reduce the pool of transitional financing. Critics say this argument may become a rationalization for delay or for “partial” alignment statements that amount to greenwashing in practice.

What asset managers are doing in response
Asset managers and large institutional investors have a limited toolbox: divestment, engagement, contractual safeguards and stewardship. Some are tightening mandates for external asset managers and demanding clarity about the in‑scope universe and measurement methodologies before buying products or entering reinsurance and annuity contracts. Others are explicitly conditioning mandates on robust transition plans, coverage of scope‑3 emissions where feasible and clear escalation frameworks where engagement fails.

The industry’s broader reactions reflect an uneasy balancing act. Many asset managers continue to invest in transition‑related assets while pressing insurers and other counterparties for higher‑quality disclosure; at the same time, a minority have withdrawn from some industry initiatives that they say risk legal or political blowback without delivering measurable outcomes. Those departures — by asset management firms and banks from voluntary net‑zero coalitions in recent years — have been interpreted variously as a retreat, a tactical repositioning or a call for clearer, standardized rules. (ropesgray.com)

Market and systemic consequences if gaps persist
Supervisors say the stakes go beyond reputational disputes. EIOPA’s prudential analysis highlighted the prospect that transition‑related market repricing — and the possibility of a disorderly transition — could produce losses on high‑carbon assets that materially affect insurers’ solvency positions. That is why EIOPA proposed targeted capital buffers for fossil‑fuel‑linked bonds and equities: to ensure capital adequacy and to nudge portfolios toward lower‑risk, lower‑emission exposures. Regulators warn that failure to incorporate transition risks could amplify market volatility and, in extreme scenarios, disrupt insurance capacity for households and corporations. (eiopa.europa.eu)

Industry groups and some insurers counter that blunt capital surcharges could reduce insurers’ ability to finance transition projects or price new risks if they raise the cost of holding transition finance. They urge that prudential policy be calibrated to avoid unintended consequences — for example, discouraging investment in transitional companies that will need capital to decarbonize. That debate — whether prudential policy should be a blunt instrument or a calibrated incentive — is central to policy discussions in Brussels, at national supervisors and in the boards of multinational insurers. (kpmg.com)

What investors and supervisors say they want
Across the investor and supervisory community the refrain is consistent: clearer, comparable, auditable disclosures; common definitions of “alignment” and “transition”; and verifiable reporting of how underwriting, investment and stewardship work together to deliver real‑world emissions reductions.

“Supervisors and investors are no longer satisfied with aspirational net‑zero pledges that lack concrete, auditable pathways and interim targets,” a senior analyst at a European asset‑owner group told industry media summarizing emerging investor demands. The analyst said investors increasingly require insurers to disclose portfolio coverage, methodologies, engagement outcomes and the real‑world effects of portfolio reallocation. (Public statements and filings from investor groups and pension funds echo this demand.) (insuranceassetmanagement.net)

Practical next steps: tighter disclosures and assurance, and clearer governance
Market participants and policy advocates outline a set of specific reforms that would reduce ambiguity:

• Mandatory baseline disclosures for insurers’ general‑account portfolios, including granular exposures to the energy sector and key transition‑sensitive asset classes, using standardized templates.

• Harmonised definitions of “insurance‑associated emissions” and consistent application of methodologies such as PCAF’s insurance‑associated emissions guidance where possible.

• Independent assurance or third‑party verification of selected climate metrics and transition‑plan implementation, so investors and supervisors can rely on audited numbers.

• Clear linkage between underwriting policy (for example, exclusions or conditional cover) and investment strategy, to prevent situations where an insurer underwrites new fossil‑fuel projects while claiming to finance a transition.

• Calibration of prudential adjustments (where adopted) to avoid starving transition finance while ensuring capital buffers reflect transition risk, with phased implementation and close monitoring for unintended consequences.

Campaign groups, investors and some policy makers also call for better disclosure of engagement results and of voting practices, so that stewardship claims are demonstrably linked to outcomes at high‑emitting issuers. Reclaim Finance and others continue to publish scorecards and case studies to hold firms accountable while pushing supervisors to make prudential adjustments adopted in principle by EIOPA binding at national and EU levels. (reclaimfinance.org)

Conclusion — a moment of alignment or continued divergence?
The debate over insurers’ climate claims has matured beyond marketing disputes. It now combines supervisory prudential policy, securities‑law enforcement against misleading ESG claims, independent mapping of exposures and investor stewardship. That convergence has placed insurers at the center of a test: whether large institutional financial firms can translate corporate net‑zero pledges into convergent underwriting and investment practice without undermining their core obligation to policyholders and without starving the real economy of capital.

If insurers can produce standardized, auditable disclosures and credible transition plans that connect underwriting and investing, the market may move from scepticism to constructive engagement. If not, investors and supervisors are prepared to tighten rules, increase capital charges on fossil‑fuel exposures and use enforcement tools to deter misleading claims — steps that would accelerate portfolio re‑alignment but could also have immediate effects on insurers’ capacity and on the financing of the energy transition.

— Reporting by [Staff writer]. Sources include EIOPA’s November 7, 2024 final report on the prudential treatment of sustainability risks; the SEC’s November 2024 enforcement releases concerning ESG statements; insurer annual and sustainability filings for 2024 (AXA, Zurich); and NGO and industry analyses on fossil‑fuel exposures and greenwashing risks. (eiopa.europa.eu)