AXA tightens oil and gas policy amid mounting pressure from climate activists
Re/insurer AXA has tightened its investment and underwriting criteria amid mounting pressure from climate campaigners to stop insuring and investing in new oil and gas projects in order to support the transition towards a low-carbon economy and help reduce the impacts of climate change.
The insurer plans to strengthen its existing oil and gas exclusions, with a specific focus on unconventional activities and new greenfield explorations.
AXA said it will stop investing in and underwriting new upstream oil greenfield exploration projects unless they are carried out by companies with the “most far-reaching and credible transition plans”. This would mean excluding all new direct investments in listed equities and corporate bonds in developed markets in oil and gas companies operating in upstream and/or oilfield services and/or downstream subsectors, as well as most midstream players.
From 2023, the company will apply the same selection process, and take into account the Science-Based Targets initiative (SBTi) framework as it becomes available, for its underwriting business of new insurance coverage on new upstream oil greenfield exploration projects.
Additionally, AXA plans to “significantly reduce” its investment and insurance exposure to unconventional exploration and production from its business from 2022. It will extend the scope of its Artic investment and underwriting restrictions beyond the Arctic circle and the 70°N zone in alignment with the Arctic Monitoring and Assessment Programme (AMAP). But said that, businesses with Norwegian operations in the AMAP region will be maintained, given their high environmental standards and lower operational carbon footprint.
On top of the existing restrictions, the company will adopt a more stringent policy by ceasing direct investments in companies producing more than 5 percent of the worldwide volume of oil sands. For underwriting, current exclusions will be extended to all lines of business.
AXA will no longer directly invest in companies, nor provide any insurance coverage to activities of companies, deriving more than 30 percent of their production from fracking / shale Oil and Gas.
Lastly, the company promises to intensify its investments in green and low-carbon energies. The Group has increased its green investment target to €26 billion by 2023, from €24 billion announced at the end of 2020.
“The climate emergency requires us to step up our actions and support the transition towards a low-carbon economy,” said Thomas Buberl (pictured), chief executive officer of AXA. “The unprecedented and complex transformation needed can only happen by enabling companies from the energy sector to implement ambitious transition plans.
“Going forward, AXA is determined to focus its support only on actors with the most far-reaching and credible transition strategies.”
Buberl added: “With over 10 years of experience and a long-standing commitment to adapt its business and leverage its strengths in the fight against climate change, AXA continues to tighten its investment and underwriting criteria, which are today among the most demanding in our industry. As the world enters a decisive decade in this fight, AXA aims to continue working and engaging with all the relevant players to deliver on its NetZero commitments, while continuing to support economies and societies in this unprecedented transformation.”
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