For a second year in a row, As You Sow filed climate-related proposals with three insurers -- Chubb, Traveler’s, and Berkshire Hathaway -- asking the companies to measure, disclose, and set net-zero targets for their underwriting and investing activities. The proposals last year earned majority votes – 72 percent and 56 percent, respectively at Chubb and Travelers, and a vote at Berkshire garnered 46 percent of independent voters supporting the proposal (25 percent overall vote).
Despite these significant votes, each of the three insurers failed to begin measuring their financed and insured emissions or adopt Paris aligned net zero targets. These failures are in contrast to U.S. based insurer The Hartford, which received the same proposal last year and committed to a goal to achieve net zero Greenhouse Gas Emissions (GHG) for its full range of businesses and operations by 2050, in alignment with the Paris Climate Accord. Insurer AIG also previously committed “to reach net zero GHG emissions across [its] underwriting and investments portfolios by 2050, or sooner.” In explaining these climate commitments AIG states that the scientific data a is unequivocal: “climate change poses a major and unprecedented threat to human health and international security and peace.” Globally, a full 30 percent of global insurers have joined the Net Zero Insurance Alliance (NZIA), committing to transition their insurance and reinsurance underwriting portfolios to net-zero GHG emissions by 2050, consistent with a maximum temperature rise of 1.5°C.
Insurer claims that it is impossible to measure insured and underwriting emissions are unconvincing -- the core business of the insurance industry is to measure and manage risk using extensive data sets and advanced analytics. Further, the Partnership for Carbon Accounting Financials and NZIA provide methods for measuring insured emissions. Similar to banks two years ago, these methodologies are new, but provide sufficient guidance for insurers to measure the GHG emissions associated with their highest carbon business sectors and to use that data for target setting.
Setting reduction targets is critical to reducing climate risk and ensuring financial stability across the economy: conservative estimates see unabated climate change leading to global costs of more than $500 billion per year. Underwriting and investing in high carbon companies increases the vicious cycle of climate-related losses which insurers themselves are experiencing and which are growing globally. Global insured losses from natural disasters reached $132 billion in 2022, 57 percent above the 21st-century average.
To reduce emissions, insurers can build the price of climate change into their insurance products, limit investments in carbon intense companies and, over time, begin limiting underwriting for high carbon projects.
New fossil fuel projects are a good start. Green Century Funds re-filed resolutions this year at Chubb, Travelers and The Hartford urging the companies to adopt a policy for the time-bound phase out of underwriting projects that support new fossil fuel production. Scenarios developed by the Intergovernmental Panel on Climate Change and the International Energy Agency show that deep cuts in fossil fuel consumption are necessary.
Danielle Fugere
President & Chief Counsel, As You Sow
Andrea Ranger
Shareholder Advocate, Green Century Capital Management