{"id":31888,"date":"2024-03-14T12:13:36","date_gmt":"2024-03-14T11:13:36","guid":{"rendered":"https:\/\/reclaimfinance.org\/site\/?p=31888"},"modified":"2024-04-03T09:51:42","modified_gmt":"2024-04-03T07:51:42","slug":"the-inconsistency-of-insurance-groups-in-the-face-of-fossil-expansion","status":"publish","type":"post","link":"https:\/\/reclaimfinance.org\/site\/en\/2024\/03\/14\/the-inconsistency-of-insurance-groups-in-the-face-of-fossil-expansion\/","title":{"rendered":"Insurance groups take an inconsistent approach to fossil fuel expansion"},"content":{"rendered":"

The major European insurers Allianz, Aviva, AXA and Generali made commitments to achieve net zero emissions by 2050 in their insurance and investment portfolios as members of the Net Zero Insurance Alliance (NZIA) and the Net Zero Asset Owner Alliance (NZAOA) several years ago (1). But while these insurance groups have committed to no longer insure new oil and gas fields, as asset owners and through their asset management subsidiaries, they carry on investing in the companies developing them. By purchasing new bonds, these insurers and their subsidiaries continue to provide the new money that the largest oil and gas developers need to finance their expansion plans. As shareholders, they also approve these companies\u2019 inadequate climate plans, as well as the renewal and remuneration of the executives responsible for these climate-wrecking strategies. <\/b><\/p>\n<\/div>

While these 4 major insurance groups have net zero pledges that apply to all of their group’s activities, there is an inconsistency between how their oil and gas policies apply to their underwriting, investment and asset management activities, despite the fact that they are all supposed to make it possible to achieve net zero by 2050.<\/span><\/p>\n<\/div>

Halting oil and gas expansion to achieve net zero<\/b><\/h2><\/span>
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Having spent more than $100 billion a year over the past 4 years in response to climate-related disasters (2), insurers are well aware of the causes and consequences of a warming planet. They are also aware of the emergency measures that need to be implemented to avoid exacerbating the situation. The International Energy Agency\u2019s net zero emissions scenario by 2050 (NZE)(3) projects a halt to the development of new approved oil and gas fields after 2021. On this basis, Allianz, Aviva, AXA and Generali have all made a commitment to stop providing insurance cover for new oil and gas fields (4).<\/span><\/p>\n<\/div>

Defending a transition without fossil fuel expansion<\/b><\/h2><\/span>
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Some insurers, such as AXA, say they prefer to have a dialogue with some companies to encourage them to make the transition without setting red lines for their insured clients developing new oil and gas resources. Worse still, AXA\u2019s position runs counter to climate science as AXA has indicated that it will continue to insure new oil and gas fields developed by companies that claim to be \u00ab\u00a0in transition\u00a0\u00bb, whereas transition implies a halt to the development of such projects.<\/span><\/p>\n<\/div>

In 2019, when the AXA Group strengthened its coal policy, it took a more consistent approach: \u00ab\u00a0AXA’s new climate strategy is part of a global approach, which excludes not only investments and underwriting in coal\u00a0\u00bb (5). At the time, AXA committed to reduce its exposure to coal in its insurance and investment portfolios to zero by 2030 in the European Union (EU) and OECD countries and by 2040 in the rest of the world. <\/span><\/p>\n<\/div>

This global approach to coal, for both insurance and investment activities, has still not been adopted by AXA and the other major insurers when it comes to oil and gas expansion.\u00a0<\/span><\/p>\n<\/div>

No longer insuring oil and gas expansion… and no longer investing a penny in it<\/b><\/h2><\/span>
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No longer insuring new oil and gas fields is a step in the right direction for these major insurance groups when it comes to oil and gas expansion. However, this is not what they are doing when it comes to their investment portfolios. Allianz, Aviva, AXA and Generali are still making new investments in companies developing new oil and gas fields, even though they refuse to insure them for climate reasons. <\/span><\/p>\n<\/div>

This is also the case at their asset management subsidiaries Allianz Global Investors (AGI), Aviva Investors, AXA Investment Managers (AXA IM), Generali Investments and PIMCO (6). They continue to invest both the premiums collected by their insurance groups and third-party money and savings in new bonds issued by some of the biggest oil and gas developers such as TotalEnergies, BP and Eni (7). Allianz’s asset management subsidiaries, for example, were involved in the purchase of bonds issued by both BP and Eni in May 2023 (8).<\/span><\/p>\n<\/div>

These insurers must commit to stop investing in companies developing new upstream and midstream oil and gas projects, which are incompatible with a 1.5\u00b0C trajectory. At the same time, they must demand an identical commitment from their asset management subsidiaries, guaranteeing that all group activities are aligned with the commitment to net zero by 2050. <\/span><\/p>\n<\/div>

Inconsistent voting behavior<\/b><\/h2><\/span>
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The inconsistency of insurers’ rhetoric on fossil fuel expansion is reflected in the votes cast by their asset management subsidiaries at annual general meetings (AGMs). In 2023, they overwhelmingly supported the climate plans of fossil fuel developers, despite their incompatibility with the IEA\u2019s 1.5\u00b0C scenario. Allianz Global Investors and Aviva Investors voted in favor of TotalEnergies’ and Shell’s Say on Climate resolutions (9), validating the strategies of some of the largest upstream oil and gas developers in the world.<\/span><\/p>\n<\/div>\n

\n\n\n\n\n\n\n\n\n
<\/th>\nTotalEnergies<\/th>\nShell<\/th>\n<\/tr>\n<\/thead>\n
Allianz Global Investors<\/td>\nFor<\/strong><\/td>\nFor<\/b><\/td>\n<\/tr>\n
Aviva Investors<\/td>\nFor<\/strong><\/td>\nFor<\/b><\/td>\n<\/tr>\n
Axa Investment Managers<\/td>\nFor<\/strong><\/td>\nAgainst<\/strong><\/td>\n<\/tr>\n
Generali Insurance Asset Management<\/td>\nAbstention<\/b><\/td>\nNot published<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

Graph 2 – Votes cast by the asset management subsidiaries of major European insurers in support of routine strategic resolutions at the 2023 AGMs of 75 fossil fuel developers (11)<\/span><\/i><\/p>\n<\/div>

Beyond climate-specific votes, these asset managers have also shown their support for fossil fuel developers\u2019 global strategies by support the direction of the company through their strategic votes (re-election of directors, approval of remuneration, approval of financial accounts, payment of dividends) instead of systematically using them to register their opposition to these companies\u2019 inadequate climate plans (10). By approving high dividends, investors are prioritizing the return on capital rather than financing the transition, even though major financial flows are needed to rapidly increase the amount of sustainable energy supplies and to develop technologies to reduce emissions from existing infrastructure. Similarly, by supporting the re-election of directors and the remuneration of executives, they are complicit in these corporate asset allocation choices and the fossil fuel expansion strategy of these companies.<\/span><\/p>\n<\/div>

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As the AGMs of the major oil and gas companies get underway, it is crucial that insurance groups adopt a consistent group-wide oil and gas policy, starting by suspending the purchase of new bonds from all fossil fuel developers that do not demonstrate a genuine desire to align with a 1.5\u00b0C scenario. They must demand a similar commitment from their asset management subsidiaries, as well as voting practices aligned with their net zero pledge. <\/b><\/p>\n<\/div>