Zurich Insurance Group Ltd. has pledged to utilize 100% renewable power in all global operations by the end of 2022 and to stop writing certain thermal coal and oil sands risks after two years as part of its commitment to achieving the goals of the Paris climate agreement. Zurich is the first insurer to commit to set targets in the framework of the UN Global Compact Business Ambition Pledge that aims at limiting global temperature rise to 1.5 degrees Celsius above preindustrial levels, according to a statement by the insurer published on Tuesday. The Paris climate agreement included pledges from 195 political leaders to hold the global average temperature to well below 2 C above pre-industrial levels and pursue efforts to limit the temperature increase to 1.5 C, although the Trump administration announced in July 2017 that the United States would pull out of the agreement. “As one of the world’s leading insurers we see first-hand the devastation natural disasters inflict on people and communities, said Mario Greco, CEO Zurich Insurance Group. “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.” Zurich will proactively engage with clients and investee companies over a 24-month period to assist them in adopting plans to reduce their exposure to thermal coal, oil sands and oil shales, the statement said. The insurer has updated its prior thermal coal policy to specify that after a two-year period it will 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 “dedicated” transportation infrastructure operators 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. “Zurich is the first global insurer to announce a policy that intends to stop both the investments in and insurance coverage of companies developing new coal projects or company models that rely on coal, tar sands and oil shale,” Asti Roesle, Greenpeace campaigner at Greenpeace Switzerland, said in a statement on Tuesday. "One of the weak spots of the new policy however is that it fails to introduce an absolute limit to coal power generation. It is also unclear by when Zurich will have reduced its exposure to coal to zero. Existing clients are given two years to develop a convincing mid-to-long term transition plan with science-based targets. While this is an acceptable approach for some diversified companies, it certainly is not for coal developers, where nothing less than a zero tolerance approach will do." “Besides new restrictions on coal, Zurich is becoming the first major primary insurer to adopt restrictions for the tar sands and oil shale sectors. AXA has already committed to divesting from tar sands and ended its coverage for new tar sands projects, but Zurich’s policy goes a step further with restrictions at the corporate level,” Ms. Roesle continued. “Currently, the insurance sector is still linked up with the main sources of climate change, fossil fuels. In order to truly fulfill their purpose, insurers must do their share in limiting global warming to 1.5 degrees, so fully phase out fossil fuels as early as 2030.” In the insurance sector, science-based targets currently do not typically exist for either underwriting or investment portfolios, so Zurich will actively work on development of industry methodology for measuring the carbon footprint of liabilities to enable setting such targets and has also joined an initiative to help financial institutions align their lending and investment portfolios with the Paris climate agreement goals, the insurer said in its statement. Zurich began instituting environmental, social and governance considerations into its core business practices in 2012 and became carbon neutral in 2014 — actions aimed at influencing behaviors by future-proofing the company’s own operations, applying both its investment and underwriting capabilities to manage climate risk, and preparing communities to mitigate against the physical effects of extreme weather, according to the insurer’s statement.
Zurich Insurance Group has said it will use 100% renewables-sourced power throughout its global operations by the end of 2022 and stop underwriting some thermal coal and oil sands risks within two years. The move makes it the first insurance firm to promise to meet a UN Global Compact Business Ambition Pledge to limit global warming. The company said it will help clients reduce their involvement with fossil fuels.