Landmark pledge makes Suncorp the first major insurer to adopt any policy restricting underwriting for oil and gas
Australian insurer Suncorp will no longer underwrite any new oil and gas exploration projects with immediate effect, in addition to phasing out all underwriting and financing for such projects altogether by 2025, it announced today.
The insurer has also pledged to ditch direct investments in oil and gas projects altogether by 2040, backed by a series of interim goals for to gradually phase them out over the next decade.
It is believed that the landmark commitments, which are laid out in the firm's Responsible Business Report 2020, make it the first insurer to adopt any policy restricting underwriting for oil and gas, in yet another sign of the winds of change blowing in the fossil fuel industry.
"Suncorp has taken a careful and considered approach to building resilience to the physical risks of climate change, as well as reducing the impacts of economic and transition risks, to ensure our business is sustainable into the future," said Suncorp chairman Christine McLoughlin said.
At the end of June 2020, fossil fuel extraction and generation made up less than 0.1 per cent of Suncorp's general insurance business, it said. Among its insurance and shareholder investment assets, exposure was below 0.5 per cent, and less than 1.5 per cent of its total assets under management.
Meanwhile, the company said its investments in low-carbon projects stood at $236m at the end of June 2020. "Suncorp will continue to underwrite, lend to and invest in companies whose business is clearly consistent with the transition to a net-zero emissions economy by 2050," today's report states.
The pledges build on the group's existing ban on support for new thermal coal projects. In 2019, it said it would not finance or insure new thermal coal mines and power plants and would not underwrite existing thermal coal projects after 2025.
Market Forces, an Australian partner of the European campaign Insure our Future, welcomed Suncorp's commitments, which it said sent "a clear message that it will not be a part of the federal government's gas expansion plans".
"Suncorp's acknowledgement that oil and gas production and exploration cannot expand if we're to deal with the climate crisis puts it ahead of most other major insurance companies," the group claimed.
However, it also highlighted "significant gaps" in Suncorp's policy. "It doesn't mention oil and gas pipelines nor gas-fired power stations," Market Forces pointed out. "Since the use of these also need to be rapidly phased out in order to limit global warming to 1.5 degrees, any company wanting to align its business with the climate goals of the Paris Agreement must set gas pipeline and gas-burning power station phase-out dates," it said.
Nevertheless, while other major insurers, including AXA and Allianz, have made commitments to phase out backing for coal-fired power plants and coal mines, Suncorps is the first to commit to ending cover for oil and gas projects.
Peter Bosshard from the Insure our Future campaign said Suncorp's announcement would therefore place significant pressure on other insurers to soon follow suit and ditch coverage for oil and gas.
"With Suncorp's new policy the exit of the global insurance industry from the oil and gas sector has started," he said. "Self-proclaimed climate leaders like Allianz, AXA and Zurich, which still play an active role in insuring oil and gas, should follow Suncorp and end their cover for new oil and gas exploration projects as well."
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