Swiss firm confirms it will no longer provide insurance for new oil and gas projects unless developers can show they have credible net zero transition plans
Swiss Re has said it will no longer provide insurance for most new oil and gas projects, as the world’s second biggest insurer unveiled plans to tighten its policies for providing cover to fossil fuel infrastructure as part of its annual sustainability report yesterday.
The Swiss firm pledged to make sure half of its overall oil and gas premiums are aligned with a 2050 science-based net zero trajectory by 2025, and then expand this commitment to cover its entire oil and gas insurance and reinsurance portfolio by the end of the decade.
In the immediate term, it also plans to stop insuring, reinsuring, and investing in all oil and gas field projects which gain approval after this year, unless developers have credible net zero transition plans, such as those verified by the Science-Based Targets initiative.
Moreover, Swiss Re said it plans to stop providing individual insurance covers for oil and gas firms responsible for the world’s 10 per cent most carbon-intensive production sites from July 2023, and stop insuring or reinsuring companies with more than 10 per cent of their production based in the Arctic region from July this year, excluding Norway.
Next year, Swiss Re also said it planned to finalise its policy approach to oil and gas through its treaty reinsurance business, with development work towards this update currently ongoing.
The announcements, which apply to both upstream and downstream companies involved in hydrocarbons, make Swiss Re the first major oil and gas insurer to adopt a policy that excludes insurance for large numbers of new projects across the sector.
In a joint foreword to yesterday’s annual report, Swiss Re CEO Christian Mumenthaler and chairman Sergio P Ermotti said the need to halve global emissions by the end of the current decade and then move to net zero by 2050 “presents a huge challenge for society and for Swiss Re”.
“Although reaching net zero emissions may seem like a daunting task, we believe it can be achieved through industry and cross-industry alliances,” they write. “But government policies such as limiting fossil fuel subsidies to encourage businesses to accelerate emissions reductions and scale up innovation, or introducing carbon pricing mechanisms to facilitate a just transition are also needed. At Swiss Re, we are fully committed to working with governments, clients and other stakeholders to reach net zero emissions in our operations by 2030 and in our underwriting and asset management by 2050.”
Swiss Re is a founding member of the UN-convened Net Zero insurance Alliance, which brings together more than 20 of the world’s leading reinsurers and insurers that have committed to transitioning their underwriting portfolios to net zero by 2050.
The latest oil and gas policies are therefore aimed at supporting the firm’s efforts to set science-based decarbonisation targets for 2025.
It builds on Swiss Re’s existing policies on thermal coal insurance and investment, which have seen the firm commit to fully phasing out support for coal assets by 2030 in OECD countries and 2040 across the rest of the world.
Environmental groups broadly welcomed Swiss Re’s updated oil and gas policies, despite noting some gaps such as the decision to provide an exception for Norway in its Arctic commitment.
Peter Bosshard, global coordinator for Insure Our Future, said the announcement “sends a strong message to fossil fuel companies, investors and governments” that oil and gas operations need to be phased out or risk becoming uninsurable by the end of the decade.
“Now, the Insure Our Future campaign calls on Munich Re, Lloyd’s and SCOR, which together account for 26 per cent of the global reinsurance market, to make commitments which build on Swiss Re’s approach by the time of their annual general meetings,” he added.
Want to find out more about how the net zero transition will impact your business? You can now sign up to attend the virtual Net Zero Finance Summit, which will take place live and interactive on Tuesday 29 March and will be available on demand for delegates after the event.