Zurich raises the stakes in the fight against climate change
June 25, 2019
The insurer will engage with customers and investee companies about their plans to reduce the use of carbon-intense fossil fuels.
Amid a deepening climate crisis, Zurich Insurance is stepping up efforts to move towards a low-carbon economy.
Zurich is expanding its existing thermal coal policy, which is aimed at reducing the use of carbon-intense fossil fuels, and updating its position to include some of the most carbon-intense fossil fuels, such as oil sands and oil shales.Zurich will engage in dialogues over a two-year period with customers and investee companies with more than 30% exposure to thermal coal, oil sands and oil shales. The aim is to drive a deeper conversation regarding their credible mid-to-long-term transition plans for reducing the use of carbon-intense fossil fuels.
Since Zurich implemented its thermal coal policy in November 2017, it has engaged with many companies in the energy sector that are taking steps to reduce thermal coal in their power generation mix.
Zurich has committed to set targets in the framework of the UN Global Compact Business Ambition Pledge, which aims at limiting global temperature rise to 1.5°C above pre-industrial levels.
The recent IPCC report, the UN Intergovernmental Panel on Climate Change, gives the world only 11 years to successfully transition to a new path or risk planetary warming with catastrophic consequences. This transition will require an immediate and major transformation across energy, land, industrial, urban and other systems.
“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 support those most impacted. It is simply the right thing to do,” said Mario Greco, CEO of Zurich Insurance Group.
Zurich believes that science-based targets play a vital role in meeting the Paris Agreement’s targets by specifying how much and how quickly companies need to reduce emissions. In the insurance sector, science-based targets do not typically exist for either underwriting or investment portfolios. However, Zurich is playing an active role in developing industry methodology for measuring the carbon footprint of liabilities to enable setting such targets.
Depending on the outcomes of its dialogues with customers and investee companies with more than 30% exposure to thermal coal, oil sands and oil shales, Zurich has pledged to no longer underwrite or invest in companies that:
- generate more than 30% of their revenue from mining thermal coal, or produce more than 20 million tons of thermal coal per year;
- generate more than 30% of their electricity from coal;
- are in the process of developing any new coal mining or coal power infrastructure;
- generate at least 30% of their revenue directly from the extraction of oil from oil sands;
- are purpose-built (or “dedicated”) transportation infrastructure operator for oil sands products, including pipelines and railway transportation;
- generate more than 30% of their revenue from mining oil shale; or
- generate more than 30% of their electricity from oil shale.