Zurich takes new underwriting stance against energy companies to tackle climate change
Zurich Insurance Group is accelerating its policy to further reduce the use of carbon fossil fuels, which will see the insurer underwrite fewer risks that contribute to climate change.
Zurich said its new commitments plan to reduce carbon emissions within its own business, at those of its clients and the companies in which it invests. The move is in line with its commitment to the UN’s Global Compact Business Ambition Pledge, which aims to limit the rise in global temperature to 1.5°C above pre-industrial levels by 2030. Zurich is the first insurer to sign the pledge, ahead of the UN’s Climate Action Summit in September.
Earlier this month, the UN called on business leaders to set “more ambitious” targets to limit the global temperature rise to 1.5°C above pre-industrial levels.
Zurich said that during the next 24 months, it will proactively work with clients and firms in which it has invested, to reduce their exposure to thermal coal, oil sands and oil shales.
The company has set new targets that will exclude it from underwriting or investing in companies that generate more than 30% of their revenue from mining thermal coal or oil shale. It has also introduced the policy for companies that generate at least 30% of revenue by extracting oil from oil sands. Zurich will take the same stance against companies that generate more than 30% of electricity from coal or oil shale.
It will also refuse to underwrite any new coal mining or coal power infrastructure, and any purpose-built transportation infrastructure operators for oil sands products. This extends to pipelines and railways.
The company is working with the Science Based Target initiative to measure the carbon footprint of insurance liabilities and set targets for underwriting and investment portfolios to reduce emissions, in line with the Paris Agreement targets.
The Science Based Target initiative independently assesses and verifies corporate emission reduction targets. It updated its measures in April to reflect the 1.5°C target proposed by the Intergovernmental Panel on Climate Change (IPCC).
Within its own organisation, Zurich Insurance said it will move to 100% renewable power across global operations by the end of 2022. It will also take action to eliminate single-use plastics and reduce paper use by 80%.
“As one of the world’s leading insurers, we see first-hand the devastation natural disasters inflict on people and communities. This is why we are accelerating action to reduce climate risks by driving changes in how companies and people behave, and supporting those most impacted. It is simply the right thing to do,” said Mario Greco, CEO of Zurich Insurance.
