Chubb’s new policy to limit underwriting on oil and gas extraction is a step in the right direction, but not enough to address rampant carbon emissions, according to climate campaigners.
On Wednesday (March 22), Chubb announced it would refuse to provide insurance coverage for oil and gas projects in government-protected conservation areas.
It also unveiled new underwriting criteria that requires clients to slash methane emissions. The global insurer is the first in the US to adopt such policies.
But the move has still fallen short from the standards set by insurers in Europe and Australia, and from the demands of climate science, advocates told Insurance Business.
“We are calling on Chubb to rule out insurance for all new oil and gas fields,” said Elana Sulakshana, senior energy finance campaigner with Rainforest Action Network.
“The policy appears to apply to both new oil and gas fields and existing ones, which is notable. But they have not yet tackled the questions around the phase-out of oil and gas production.”
Green Century Funds, a shareholder group that has clashed with Chubb on its climate actions, agreed that the insurer’s new stance won’t stop new oil and gas projects.
Andrea Ranger, Green Century Shareholder Advocate, said that global bodies have made it clear there should be no new developments in fossil fuel production beyond what was already permitted at the end of 2021.
“We’re already not in line with a 1.5-degree Celsius rise [in global temperatures],” Ranger said. “Do we like that Chubb is doing something? Yes.
“All the insurers, bankers, and fossil fuel companies should have started transitioning a long time ago.”
A major gap in Chubb’s framework is that it does not apply to coverage for midstream oil and gas infrastructure, according to Sulakshana.
“There are many projects that are being built on protected areas, such as the East African crude oil pipeline, that are facing massive community opposition due to the climate and environmental impacts,” she said.
“With this policy, Chubb free to continue to underwrite pipeline projects or export gas terminals.”
For Green Century, the insurer’s announcement leaves more questions than answers.
“It’s not clear whether Chubb’s new policy aligns its entire book of business with a 1.5-degrees Celsius scenario of global warming,” said Green Century Funds president, Leslie Samuelrich, in a statement.
Green Century has filed shareholder proposals over the past two years asking Chubb to commit to phasing out underwriting for new coal, oil, and gas developments. The 2022 proposal received 19.4% of the vote at Chubb’s annual general meeting – enough to allow Green Century to file again this year.
BREAKING: @Green__Century has filed with @Travelers @Chubb @TheHartford asking them to stop underwriting new fossil fuel projects. None of the 3 companies has committed to stop underwriting projects in the Arctic. #ProtectTheArctic #StandWithTheGwichin https://t.co/7De4FekMmI pic.twitter.com/hFpFNYy3kf— Arctic Refuge Defense Campaign (@defendthearctic) December 22, 2022
Chubb’s appeal to block the proposal was struck down by the US Securities and Exchange Commission.
“We need to see more details to know whether this is an impactful policy or simply a diversion from our shareholder proposal, so we invite Chubb to further explain its new policy,” Samuelrich said.
But Ranger clarified that Green Century are not asking for Chubb to rule out underwriting all existing energy developments.
“Some energy companies may actually be developing low-carbon projects and Chubb should underwrite those risks,” she said.
“Nevertheless, underwriting new oil and gas supply amplifies medium- and long-term climate risk, which doesn’t add shareholder value.”
Chubb has come under fire from indigenous groups, climate activists and shareholders who are calling on the company to stop providing insurance coverage for oil and gas projects.
Last October, dozens took the street outside CEO Evan Greenberg’s home in New York to protest Chubb’s policies.
The company brings in up to $800 million in annual premiums from the fossil fuel industry, according to market intelligence firm Insuramore.
Amid mounting pressure, Chubb has made moves to tackle the impacts of climate change and work toward the goal of a net-zero future.
In January, it launched a global climate business unit called Climate+, which offers insurance products and services to businesses supporting the transition to a low-carbon economy.
Though questions remain over Chubb’s new underwriting guidelines, Sulakshana is hopeful that the steps prompt other insurers to get in line.
“We will certainly be turning to some of the major oil and gas insurers in the US, such as AIG and Liberty Mutual, and urging them to follow suit to match and exceed the policy that Chubb has set today,” she said.
Chubb declined to comment.
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