Climate campaigners have hailed a decision by the world’s largest reinsurer, Munich Re, to scale back its support for fossil fuel projects, and are urging other influential oil and gas backers to follow in its footsteps.
Munich Re announced on October 6 it will refuse to insure any contract or project exclusively covering the financing, planning, construction or operation of oil and gas fields, midstream infrastructure or oil-fired power plants, starting from April next year.
“As an environmentally conscientious business, Munich Re aims to play its part in meeting the targets of the Paris Climate Agreement,” its statement says.
“The group has therefore set itself ambitious decarbonisation targets for its investments, its (re)insurance transactions and its own business operations.”
The insurer’s listed equities and corporate bond portfolio will also halt all direct investment in companies whose sole focus is oil and gas. From 2025 the company will require its highly polluting oil and gas clients to make a “credible commitment” to reaching net-zero emissions by 2050.
The International Energy Agency warned last year that an immediate halt to all new fossil fuel projects is required in order to reach net-zero carbon emissions by 2050.
Munich Re’s decision follows sustained pressure from climate activists over its historic support for fossil fuel-related transactions.
At its annual general meeting in April, two German human rights organisations – Urgewald and Dachverband der Kritischen Aktionärinnen – urged shareholders to refuse to ratify management board proposals, arguing the company was “failing to sufficiently fulfil its responsibility to implement more effective measures for climate protection”.
A countermotion filed by the latter group said Munich Re had been “warning of the catastrophic effects of the climate crisis” for almost 50 years, yet was “too hesitant in its measures against the use of fossil fuels, even though they are the main cause of the climate crisis”.
The board’s proposals were ratified, but Regine Richter, an insurance campaigner at Urgewald, says last week’s announcement is a sign the company is now “catching up with the leading insurers on climate”.
“We would have wanted to see bolder steps on gas, but at least with this policy the world’s largest reinsurer has now shown that it’s starting to take its own climate warnings seriously,” she says.
Richter points out Munich Re does not exclude gas in midstream or downstream projects, telling GTR: “It would had been bolder if they had done that, since building midstream – such as pipelines, LNG terminals or gas power plants – risks a long term lock-in, incentivising longer use of gas.”
The announcement follows similar decisions from rival insurers over recent months. In April, Allianz announced it would stop insuring and investing in new oil and gas projects from January 2023, and would not renew existing cover after July the same year.
At the time, Insure Our Future – a climate campaign backed by groups including Market Forces, Oil Change International and Stand.Earth – said that made Allianz the 10th major insurance company to phase out oil and gas cover.
That announcement followed similar moves by Swiss Re and Hannover Re, the second and third-largest reinsurers globally.
Lindsay Keenan, European coordinator of the campaign, says insurers in Europe “are starting to recognise they need to stop supporting all fossil fuel expansion, including oil and gas”, but calls on others to follow suit.
“Munich Re’s policy sends a message to the wider insurance industry and to the oil and gas sector that they must act urgently to align their business with climate science and the 1.5°C climate target or risk not being able to find reinsurance cover,” he says.
Some campaigners are now setting their sights on other major insurance companies. Ariel Le Bourdonnec, insurance campaigner at Reclaim Finance, says Paris-headquartered Scor “remains one of the last major European reinsurers without a robust policy against oil and gas expansion”.
“Scor must follow Munich Re and rapidly improve its oil and gas policy by committing to stop covering new upstream oil and gas projects,” he says.
Maya Mailer, co-founder of climate justice group Mothers Rise Up, says Munich Re’s decision to stop underwriting oil and gas from its syndicate at Lloyd’s of London “sends a critical message to the Lloyd’s marketplace that the insurance industry cannot enable new fossil fuels”.
“We sincerely hope that Lloyd’s Council chair Bruce Carnegie-Brown will formally recommend that all Lloyd’s syndicates also stop underwriting new conventional oil and gas,” she says.
Representatives for Scor and Lloyd’s did not respond when contacted by GTR.
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