‘We are going public’: Australian Ethical escalates engagement with QBE over fossil fuel underwriting

Fossil fuel expansion requires a financial labyrinth to keep it going. Alongside banks and equity investors, insurers are in the mix too. Their underwriting activity is a rather critical piece of the puzzle – paving the way for funding to flow into new oil and gas projects.

For Australian Ethical, a superannuation fund and investment manager, cutting off fossil fuel financing is one of six strategic priorities for its stewardship.

Now, the asset owner with over $13bn under management is escalating engagement with QBE – a listed Australian insurer in which the fund’s holdings are worth $56m.

Fossil fuel underwriting

Australian Ethical’s key contention is that QBE’s policy of continued and unrestricted fossil fuel underwriting is unjustified. In addition, nearly 50% of its underwriting portfolio is in property and agriculture – sectors that are uniquely exposed to physical risk.

Which, for its shareholders, necessitates vigilant oversight of the insurer’s climate risk management.

“We’re calling on QBE to disclose how much of its current underwriting it expects to have to exit over the next three decades because of climate change” says Amanda Richman - ethical stewardship lead at Australian Ethical.

Currently, Australian Ethical says QBE’s policies allow underwriting for new oil and gas projects without an assessment for Paris alignment.

“Shareholders aren’t getting access to the information we need and we’re questioning whether board and management are making decisions in QBE’s long-term interests”, Richman warns.

Australian Ethical reckons that QBE’s business model leaves unanswered questions over the effect of climate risk on future earnings. Earlier, the insurer had exited property portfolios in Australia and North America – a move that could affect earnings.

If the plan is to increase premiums in a bid to protect the bottom line, Richman is not convinced that is a viable solution. “While some may consider that raising premiums can help manage QBE’s exposure to climate risk and protect margins temporarily, there is a natural ceiling”, she adds.

Escalation

Australian Ethical’s engagement with QBE has been many years in the making. Conversations with the company over fossil fuel underwriting trace as far back as 2016.

In 2019, the fund co-filed a shareholder resolution at QBE resulting in the latter announcing a coal exposure phase out. Then, in 2023, Australian Ethical escalated its engagement by voting against the re-election of QBE’s directors – including its chair – on grounds of fossil fuel underwriting.

In its latest stewardship report, Australian Ethical vowed to escalate engagement with QBE further in 2025.

Then, in March this year, the fund wrote to the insurer’s board – once again seeking clarifications over fossil fuel financing. “Australian Ethical was disappointed to not receive definitive answers in QBE’s response”, the fund said in a statement.

Now, following QBE’s 2025 annual general meeting, Australian Ethical has taken its engagement with QBE into unprecedented territory: the public realm. It will hope that a public outcry could step in where private conversations have frustratingly fallen short - burgeoning the pressure on QBE to do better.