Insurers doubling down on fossil fuels causes a storm ahead of AGMs
In proxy statements, a range of large insurers reject resolutions that urge them to stop underwriting new fossil fuel projects
As proxy season has kicked off, with asset owners and other shareholders flocking to their respective companies to give their boards a thumbs up or to express their dismay, boards are working hard to steer any AGM vote in a particular direction.
The US insurance sector is no exception.
This past week, Chubb, The Hartford, and Travelers released proxy statements urging shareholders to vote against the climate and human rights resolutions on the ballot at their annual general meetings, scheduled for next month.
In their proxy statements for this year’s AGM, Chubb, The Hartford, and Travelers reject resolutions that call on them to stop underwriting new fossil fuel projects (The Hartford and Travelers), to disclose emissions reductions plans in line with limiting global warming to 1.5°C (Chubb and Travelers), and to issue a report on human rights and racial equity (Chubb and Travelers, respectively).
They argue that their existing climate policies are sufficient to tackle the climate crisis.
However, all three insurers, along with most of the U.S. sector, continue to underwrite the expansion of fossil fuels, which contradicts recommendations to limit global warming to 1.5°C from global entities including the International Energy Agency and the United Nations.
Therefore, their recommendations to shareholders ahead of their AGMs is causing quite a storm, with shareholders, interest groups and others divided over the companies' stance.
Mary Sweeters, senior strategist with Insure Our Future, points out that the insurers lag significantly behind global peers with respect to their climate and human rights due diligence underwriting policies, exposing them to reputational and financial risks.
“Instead of putting time and energy into developing ambitious policies to address their contribution to the climate crisis as well as the climate risks and human rights risks posed by their underwriting practices, Chubb, The Hartford, and Travelers are fighting concerned shareholders who are bringing reasonable proposals to address these risks,” said Sweeters.
Chubb's new policy
However, last month, Chubb became the first U.S. insurer when Chairman and CEO Evan G. Greenberg (above) announced his company will limit insuring some oil and gas extraction projects with new standards on methane emissions and conservation.
Despite this pledge, Rainforest Action Network released an analysis of Chubb’s new policy, outlining how Chubb’s new standards do not restrict support for many controversial fossil fuel expansion projects, such as the Willow Project in Alaska and the East African Crude Oil Pipeline (EACOP) in Uganda and Tanzania.
Elana Sulakshana, senior energy finance analyst with Rainforest Action Network, does acknowledge “Chubb’s new policies represent an important step forward among U.S. insurers."
She called on shareholders to force Chubb "to cease insuring all fossil fuel expansion projects, regardless of if they are located in conservation areas or if they have plans to reduce methane emissions associated with production."
“Investors will have the opportunity to hold Chubb accountable to its commitments this May by voting for shareholder resolutions urging the company to set emissions reductions targets and to issue a report on human rights evaluation in the underwriting process," Sulakshana noted.
Meanwhile, Tom Swan, executive director of Connecticut Citizens Action Group (CCAG), focuses on Travelers.
“We are very disappointed that Travelers continues to resist business strategies that would align the company with a 1.5°C global warming pathway.
He thinks the "company is pushing back against reasonable shareholder actions while continuing to obfuscate the risk that failure to stay on this pathway will present to shareholders and policyholders."
Swan added that "the unanticipated losses in the fourth quarter of 2022 due to storm payouts are only likely to increase due to the inaction of management.”
When approached by Net Zero Investor, Chubbs and Travelers were not immediately available to comment.