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Climate activists urge insurance companies to stop insuring carbon projects

A group of climate activists has sent a letter to 30 insurance company bosses, calling on them to immediately stop underwriting new fossil fuel carbon projects. Insure our Future, a global consortium of activists, issued the letter on March 21, 2023, to companies such as Munich Re, Zurich Insurance, and AXA.

The six-page letter, signed by 23 climate groups, including non-governmental organizations (NGOs), stated that the insurance industry has failed to meet the world’s climate goal of limiting global warming to 1.5 degrees Celsius.

What do activists demand about carbon projects?

Insure our Future, a coalition of climate activists has called on 30 insurance company executives to cease underwriting fresh fossil fuel projects immediately. The group’s demands include halting insurance for new fossil fuel consumers who do not endorse the 1.5-degree Celsius threshold for global warming and enacting legally binding targets for insured emission reductions by July 2023.

Insurers, as risk managers in society, have a unique responsibility to act and the ability to promote change, the group claimed. The letter argued that new fossil fuel ventures would not be feasible and existing ones could not continue to operate without insurance.

The call for action follows a warning from United Nations Secretary-General Antonio Guterres that the “climate time bomb is ticking.” He urged rich countries to cut emissions sooner following a new assessment from scientists that revealed there is little time to lose in tackling climate change.

Loopholes and policies about carbon projects

The letter stated that although some insurance companies have made their underwriting and investment policies stricter by excluding certain polluting industries, their focus has mainly been on coal rather than oil and gas.

Additionally, there are several gaps in these policies and standards that permit insurance companies to continue supporting the growth of fossil fuel production.

Activists’ action plans for carbon projects insured

Climate-related resolutions are already on the agenda at U.S. insurers, according to Peter Bosshard, one of the letter’s authors with The Sunrise Project, and more could follow.

U.S. insurers such as Chubb, Hartford, and Travelers (TRV.N) are among companies facing climate-focused shareholder resolutions at upcoming annual shareholder meetings. Bosshard added that they were considering doing the same with Japanese insurers for next year, and the European insurers would also face the same action if they don’t get more serious.

Response from insurance companies

Neither Munich Re nor Zurich Insurance responded to questions about the letter specifically. Both, however, stated that they were in regular contact with non-governmental organizations. Munich Re stated that it was “constantly working” toward net-zero carbon emissions.

Zurich stated that it was “not a major insurance provider” to the fossil fuel industry and that it had reduced its market share, a trend that is expected to continue.

Although AXA acknowledged its “ambitious” dedication to financing the energy transition, it has no intentions of halting its investments in oil and gas. According to the company, these resources are currently indispensable for households and businesses, and consequently, for the functioning of economies.

Industry carbon projects executives’ stance vs environmentalists

Certain industry leaders have put forth the argument that if they abruptly cut ties with polluting industries, it would lead to a surge in unemployment. Moreover, they believe that activists are too fixated on stopping activities instead of promoting transformation. On the contrary, climate activists contend that such justifications are merely excuses to avoid taking action.

The demand from climate activists to insurance companies to stop insuring carbon projects is a crucial step towards tackling climate change. Insurers can play a crucial role in shaping the energy transition by moving away from fossil fuels and towards sustainable energy sources.

Insurance companies must realize that their investments in carbon-intensive industries not only increase their financial risk but also increase the risk to the planet. Climate activists’ efforts should be appreciated as they are working towards creating a sustainable future for all.