AXA toughens up climate commitments

Actions being taken to support conversion to a low-carbon economy

AXA toughens up climate commitments


By Ryan Smith

AXA has announced that it has extended its commitment to fight climate change by setting several new milestones in its approach to the energy sector. The insurance giant is strengthening its oil and gas exclusions, with a specific focus on unconventional activities and new greenfield explorations.

“The climate emergency requires us to step up our actions and support the transition towards a low-carbon economy,” said Thomas Buberl, CEO of AXA. “The unprecedented and complex transformation needed can only happen by enabling companies from the energy sector to implement ambitious transition plans. Going forward, AXA is determined to focus its support only on actors with the most far-reaching and credible transition strategies.”

AXA has made the following new commitments:

First, it will stop investing in and underwriting new upstream oil greenfield exploration projects unless they are carried out by companies with the most far-reaching and credible transition plans.

AXA excludes all new direct investments in listed equities and corporate bonds in developed markets in oil and gas companies that operate in upstream and/or oilfield services or downstream subsectors, as well as most midstream players, the company said. AXA selects integrated oil and gas companies for investments based on very restrictive criteria, the company said. Less than 5% of the approximately 650 companies identified in NGO Urgewald2’s Global Oil and Gas Exit List meet the criteria. 

Starting in 2023, AXA will apply the same selection process for its underwriting business of new insurance coverage on new upstream oil greenfield exploration projects. AXA will also take into account the Science-Based Targets Initiative framework as it becomes available, the company said.

Secondly, AXA will significantly reduce its investment and insurance exposure to unconventional exploration and production starting next year, as follows:

  • Arctic: AXA will extend the scope of its investment and underwriting restrictions beyond the Arctic circle and the 70°N zone to align with the Arctic Monitoring and Assessment Program (AMAP). Only business with Norwegian operations in the AMAP region will be maintained, due to those businesses’ high environmental standards and lower operational carbon footprint. AXA will exclude new investments and underwriting coverage for oil and gas extraction activities carried out in the AMAP region by companies deriving more than 10% of their production from the AMAP region or producing more than 5% of the global volume of AMAP-based oil and gas. For underwriting, exemptions may be granted if the projects are carried out by companies “with the most far-reaching and credible transition plans,” AXA said.
  • Oil sands: In addition to its existing restrictions, AXA will cease direct investments in companies producing more than 5% of the worldwide volume of oil sands. For underwriting, current exclusions will be extended to all lines of business
  • Fracking/shale oil and gas: AXA will no longer directly invest in companies, nor provide any insurance coverage for the activities of companies, deriving more than 30% of their production from fracking or shale oil and gas

Thirdly, AXA is continuing to intensify its investments in green and low-carbon energies. The company's green investment target has increased to €26 billion (about SG$40.57 billion) by 2023, up from the €24 billion target announced at the end of last year.

“With over 10 years of experience and a longstanding commitment to adapt its business and leverage its strengths in the fight against climate change, AXA continues to tighten its investment and underwriting criteria, which are today among the most demanding in our industry,” Buberl said. “As the world enters a decisive decade in this fight, AXA aims to continue working and engaging with all the relevant players to deliver on its net-zero commitments, while continuing to support economies and societies in this unprecedented transformation.”

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