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Insurance firms make massive North Sea oil investment – and climate lobbyists aren't happy

Insurance firms make massive North Sea oil investment – and climate lobbyists aren't happy | Insurance Business UK

Insurance firms make massive North Sea oil investment – and climate lobbyists aren't happy

Several insurance companies have invested £6.3 billion in the lucrative oil and gas industry in the North Sea, according to campaign group Uplift and non-profit research firm Profundo.

Investigative journalism co-operative The Ferret reported that 22 of the world’s biggest insurers were behind the 10-digit figure handed over to energy companies between 2016 to 2021, with AXA, Allianz and Aviva contributing more than half of the amount at £4.3 billion.

Uplift and Profundo’s revelation prompted some environmental lobbyists to call out the “staggering hypocrisy” of these insurance companies that have also vowed to double down on the climate crisis. Lindsay Keenan, European coordinator at Insure Our Future, was among those who slammed insurers for being two-faced about the situation.

“Insurers should not be investing in, nor insuring, fossil fuel companies that have oil and gas expansion plans,” Keenan told The Ferret. “[They] claim to understand climate science and to be leaders on climate action, yet all the while they fund the oil companies who are causing climate change.”

To make matters worse, some insurance companies are accused of hiking premiums for homeowners living in high-risk areas impacted by climate change – something that has been dubbed a “poverty premium”.

“Now more than ever, it is clear that we have to stop backing fossil fuels and invest instead in the UK’s abundant and affordable sources of renewable energy,” said Tessha Khan, director at Uplift. “The government needs to stop these firms from continuing to make vast profits from oil and gas at our expense, and redirect all that private investment into the UK’s vast renewable resources, for the sake of people’s bills, jobs and the climate.”

Meanwhile, insurance companies retorted that investing a large sum allows them to direct  fossil fuel companies toward the right path of improved sustainability credentials.

“Engagement is our preferred approach to stewardship, but we will divest from companies that have repeatedly ignored our calls for improvement and change,” an Aviva Investors spokesperson said. “Divestment may be a simpler solution in many cases, but it is not the way to influence long-term systemic change in an industry or sector.”

A spokesperson from Net Zero Asset Owners Association (NZAOA) – who has AXA SA, Allianz SE and Swiss Re AG among its members – agreed with this sentiment and claimed divestment should be the “last resort” in striving towards real change.

"Divestment from oil majors will do little to address climate change. It will simply displace the problem,” the NZAOA spokesperson said. “If responsible, active investors divest, potentially less responsible investors will replace them and continue to fund ‘business-as-usual’ strategies.”