Zurich Insurance Group AG has taken a bold step by announcing it will cease to underwrite new oil and gas projects going forward.
Accoridng to Insurance Journal, this decision aligns with the insurer’s ambitious goal to achieve net zero emissions by 2050, marking a significant pivot in its policy to support a more sustainable future. Chief Executive of Commercial Insurance at Zurich, Sierra Signorelli, highlighted the company’s commitment to environmental sustainability, stating, “Further exploration and development of fossil fuels isn’t required for the transition. We think it’s the right time to evolve our position.”
The new policy is a part of Zurich’s broader climate-transition plan, set to be detailed later this year, which will also involve stringent measures for the insurer’s highest-emitting corporate customers. These clients will be required to demonstrate substantial efforts in reducing their carbon footprints. Despite the substantial premiums generated from insuring fossil-fuel infrastructure, which amounted to approximately $2.1bn last year, Zurich anticipates that the new restrictions will not significantly impact its bottom line. The insurer asserts that while it will not support new fossil-fuel ventures, it will continue to provide coverage for existing projects.
The insurance industry has faced challenges in addressing climate change, with Zurich withdrawing from the Net Zero Insurance Alliance last year due to concerns over the political and legal ramifications. However, Zurich’s CEO, Mario Greco, emphasized the importance of companies standing firm in their beliefs and not relying solely on alliances to drive change. This stance has been reinforced by the company’s proactive measures to engage with its clients on sustainability issues, setting a clear expectation for significant investment towards net zero goals, beyond mere presentations.
The policy update comes after Zurich faced criticism for its support of new oil and gas extraction projects. However, this new direction has been welcomed by environmental advocates, including Nora Scheel from the Swiss nonprofit Campax, who considers it an “important step” towards aligning Zurich with its European counterparts in the fight against climate change.
Zurich’s initiative to focus on cleaner, sustainable energy solutions, including carbon capture and hydrogen power, underscores the crucial role insurers play in facilitating the global transition towards renewable energy. By setting stringent standards for its clients and expanding coverage for clean energy infrastructure, Zurich is poised to significantly influence the pace and direction of environmental sustainability within the InsurTech industry.
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