Chubb ups climate initiatives but vows to swear off ‘sweeping net-zero pledges’
Global property/casualty insurer Chubb has adopted new underwriting standards for oil and gas extraction projects wherein the insurance coverage will be contingent on the client’s adoption of evidence-based plans to reduce methane emissions. Its chief executive stated that although the company is accelerating and expanding its climate-related initiatives, it won’t be committing to “sweeping net-zero pledges” as it doesn’t see it as a viable path to achieve.
Additionally, the carrier has decided to not provide insurance coverage for oil and gas projects in government-protected conservation areas in the World Database on Protected Areas that do not allow for sustainable use.
The move is part of an ongoing collaboration and consultation with environmental stakeholders and experts, Chubb said in a statement.
Under the new criteria, clients will be required to reduce methane emissions, a byproduct of oil and gas production that are among the most severe greenhouse gases, in order to secure coverage.
"The methane-related underwriting criteria that Chubb has adopted – the first of their kind in our industry – are focused on the balance between the need to transition to a low-carbon economy and society's need for energy security," said Evan Greenberg, chairman and CEO of Chubb.
"As a company, we are accelerating and expanding our climate-related initiatives without committing to sweeping net-zero pledges for which, in our judgment, there is not a viable path to achieve,” Greenberg argued.
“We will continue to pursue in earnest a responsible, realistic and science-based approach,” he added. “Implementing these underwriting criteria encourages oil and gas producers to adopt technologies to reduce GHG emissions in extraction. We know that many of our clients in the industry are already committed to limiting methane emissions and we will work to expand those commitments."
Chubb’s key provisions of the underwriting standards are:
Standards for methane emissions. Chubb will continue to provide insurance coverage for clients that implement evidence-based plans to manage methane emissions including, at a minimum, having in place programs for leak detection and repair and the elimination of non-emergency venting. Clients must adopt one or more measures that have been demonstrated to reduce emissions from flaring. These criteria will commence immediately and customers will have a set period of time to develop an action plan based on their individual risk characteristics. Chubb will also create a customer resource center to support oil and gas insureds in identifying and adopting methane emissions reduction technologies.
Standards for protected conservation areas. Effective immediately, Chubb will not underwrite oil and gas extraction projects in protected areas designated by state, provincial or national governments. Chubb's policy applies to conservation areas covered by International Union for the Conservation of Nature (IUCN) management categories I-V in the World Database on Protected Areas, which includes nature reserves, wilderness areas, national parks and monuments, habitat or species management areas, and protected landscapes and seascapes. The sixth IUCN category applies to protected areas that allow sustainable use. By the end of 2023, Chubb will develop and adopt standards for projects in category VI areas in the World Database of Protected Areas as well as for oil and gas extraction projects in the Arctic, Key Biodiversity Areas, mangrove forests, and global peatlands that are not currently listed in the World Database on Protected Areas.
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