Rainforest Action Network: Analysis – Chubb's New Conservation and Methane Standards Remain Inadequate But Should Exclude Support for EACOP Pipeline

SAN FRANCISCO, California, May 16 (TNSres) -- Rainforest Action Network issued the following news release:

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New criteria falls short of aligning with 1.5 C

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In a SEC filing of "Additional Proxy Soliciting Materials" Chubb quietly updated its oil, gas, and conservation policies. RAN's analysis, released ahead of Chubb's Annual General Meeting Thursday, May 16th, has concluded that while the updates are a small improvement, the loopholes and narrow scope result in policies that continue to fall short of the global climate goal of keeping human-induced heating under 1.5 C and fail to address the impact of oil and gas operations on nearby ecosystems and communities.

"A major, immediate test case for Chubb's newly announced midstream conservation standards comes in the form of the controversial East African Crude Oil Pipeline that bisects protected areas outlined in its new policy." said Aditi Sen, Climate and Energy Program Director with Rainforest Action Network. "We eagerly await public confirmation from Chubb that it will be excluding this project going forward."

Chubb's methane criteria now requires oil and gas clients to have a plan to manage methane emissions and put limits on emission intensity. The major loophole in this criteria is that it only applies to the oil and gas operational emissions, not Chubb's overall insured emissions nor the Scope 3 emissions of its insured projects. In fact, Chubb's Board of Directors recommends its shareholders vote against a shareholder resolution to require Chubb to disclose its Scope 3 emissions at its annual general meeting on May 16th. Two additional loopholes exist around compliance. The compliance expectation for oil and gas clients with annual revenues under $1B does not specify a timeline for meeting the criteria. The expectation for clients with annual revenues over $1B allows any client who can "demonstrate progress," report and measure their methane emissions to presumably delay compliance long past 2030.

Similar issues were noted when analyzing Chubb's new midstream oil and gas conservation standards. By focusing on narrowly defined boundaries of greenfields, Chubb fails to address the impact oil and gas operations have on nearby ecosystems and communities. It also fails to address the harms of existing projects.

To live up to its word and bring about the transition to a low-carbon economy it claims to support, Chubb must immediately cease insuring all fossil fuel expansion projects, regardless of whether they are located in conservation areas or have plans to reduce operational methane emissions. These are the urgent, near-term commitments on fossil fuels and Indigenous rights that Chubb failed to make in its latest policy announcement, as detailed in Insure Our Future's annual letter to the insurance industry, released in April 2024:

1. Immediately cease insuring new and expanded coal, oil, and gas projects.

2. Immediately stop insuring any new customers from the fossil fuel sector which have not published a transition plan aligned with a credible 1.5 C pathway, and stop offering any insurance services which support the expansion of coal, oil and gas production even among existing customers. By the end of 2025, completely phase out all insurance services for existing fossil fuel company customers which have not published such a transition plan.

3. Immediately divest all assets, including assets managed for third parties, from coal, oil, and gas companies which have not published a transition plan aligned with a credible 1.5 C pathway and scale up investments in a just, equitable, and rapid global transition to a clean energy economy.

4. Immediately define and adopt binding targets for reducing your insured emissions which are transparent, comprehensive and aligned with a credible 1.5 C pathway.

5. Explore ways to bring fossil fuel companies to court in order to make polluters rather than insurance customers pay for the growing costs of climate disasters.

6. Immediately establish, and adopt as policy, robust due diligence and verification mechanisms to ensure clients fully respect and observe all human rights, including a requirement that they obtain and document the Free, Prior, and Informed Consent (FPIC) of impacted Indigenous Peoples as articulated in the UN Declaration on the Rights of Indigenous Peoples.

7. Immediately bring stewardship activities, membership of trade associations and public positions as a shareholder and corporate citizen in line with a credible 1.5 C pathway in a transparent way.

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To the CEOs of 30 major fossil fuel insurers

Dear CEO,

"1.5 C of global warming is extremely risky, with the chance of triggering multiple climate tipping points and multi-meter sea level rise, which may be irreversible", a report by the Institute and Faculty of Actuaries warned in November 2022. "1.5 C should be viewed similar to a ruin scenario for society - a level we must not exceed."/1

In recent months we exceeded this "ruin scenario for society" for a full year, with hardly any response from governments and the corporate sector. Every single month since June 2023 was the warmest in a data set going back to 1940, and the global mean temperature for the last twelve months was the highest on record at 1.56 C above the pre-industrial average./2

Last year, natural disasters again caused losses of approximately $250 billion, of which an estimated $100 billion were insured. These costs underestimate the massive economic, social and health impacts of slow onset climate change, such as extreme temperatures, desertification, and biodiversity loss. The escalating human costs of climate change, including health impacts, loss of livelihood and displacement, are predominantly borne by poor and marginalized groups in society, those who have contributed the least to the climate emergency.

The insurance industry is responding to the escalating climate emergency by increasing premiums or entirely withdrawing from regions at the frontline of the crisis. Insurance cover for climate risks is largely lacking in large parts of the Global South and becoming increasingly unaffordable or unavailable in parts of Australia, Europe and the United States. This further shifts the cost of climate change from the carbon polluters and their supporters to individual families and businesses.

While the insurance industry abandons climate-affected communities, many carriers continue to underwrite the expansion of fossil fuel extraction and combustion, fueling the very crisis insurers have warned about for 50 years. At the end of 2023, primary insurers with a 41% market share in commercial P&C insurance had adopted coal exclusions and 20% had adopted oil and gas restrictions. Reinsurance companies controlling 63% of the market had adopted coal and 47% oil and gas restrictions respectively./3

Yet the oil and gas restrictions in particular are often shallow and beset by massive loopholes. No major fossil fuel insurer has ruled out support for all new upstream, midstream, and downstream oil and gas projects, and most continue to underwrite oil and gas companies that are still expanding their production in defiance of climate science.

Many insurance companies committed to transition from fossil fuels to a clean energy economy as members of the Net Zero Insurance Alliance (NZIA). Yet this past year the NZIA process collapsed. Former Alliance members could have upheld their net zero commitments at an individual level, and a few indeed published the transition plans and targets they had promised. However, most used their exit as an opportunity to delay their plans and establish targets that did not meet the modest criteria which they had agreed on as members of the NZIA.

The climate crisis threatens to destroy the foundations of a healthy planet for future generations. The insurance industry is in a powerful position to avert such an emergency by accelerating the transition from fossil fuels to a clean energy economy. We thus ask you to take the following steps:

1. Immediately cease insuring new and expanded coal, oil, and gas projects.

2. Immediately stop insuring any new customers from the fossil fuel sector which have not published a transition plan aligned with a credible 1.5 C pathway, and stop offering any insurance services which support the expansion of coal, oil and gas production even among existing customers. By the end of 2025, completely phase out all insurance services for existing fossil fuel company customers which have not published such a transition plan.

3. Immediately divest all assets, including assets managed for third parties, from coal, oil, and gas companies which have not published a transition plan aligned with a credible 1.5 C pathway and scale up investments in a just, equitable, and rapid global transition to a clean energy economy.

4. Immediately define and adopt binding targets for reducing your insured emissions which are transparent, comprehensive and aligned with a credible 1.5 C pathway.

5. Explore ways to bring fossil fuel companies to court in order to make polluters rather than insurance customers pay for the growing costs of climate disasters.

6. Immediately establish, and adopt as policy, robust due diligence and verification mechanisms to ensure clients fully respect and observe all human rights, including a requirement that they obtain and document the Free, Prior, and Informed Consent (FPIC) of impacted Indigenous Peoples as articulated in the UN Declaration on the Rights of Indigenous Peoples.

7. Immediately bring stewardship activities, membership of trade associations and public positions as a shareholder and corporate citizen in line with a credible 1.5 C pathway in a transparent way./4 These policies should be applied by both insurance and reinsurance companies at the Group level. Reinsurance companies should apply the policies to direct, facultative and treaty business.

As always, your response to this letter will serve as the basis of our annual scorecard report on insurance, fossil fuels and the climate emergency. Our scoring partner Reclaim Finance will send a questionnaire with specific questions to your sustainability staff in the coming months. We ask you to respond to our letter, using the questionnaire, by July 15, 2024.

At the end of February, thousands of people in 31 countries around the world participated in a powerful and creative global week of action under the motto, #InsureOurFutureNOW. This momentum will continue to build as long as the insurance industry continues to fuel the escalating climate emergency.

We call on you to take action to avoid a ruin scenario for society now. Later is too late.

Thank you and kind regards,

View letter co-signers here: https://us.insure-our-future.com/wp-content/uploads/sites/3/2024/04/IOF-annual-insurance-letter-0424.pdf

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Footnotes:

1/ Institute and Faculty of Actuaries & Climate Crisis Advisory Group, Climate Emergency - tipping the odds in our favour, November 2022

2/ Copernicus Climate Change Service, Warmest February on record, the 9th consecutive warmest month, March 8, 2024

3/ Insure Our Future, 2023 Scorecard on Insurance, Fossil Fuels and the Climate Emergency, based on research by Insuramore

4/ See the Background notes on this platform in the Annex to this letter.

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Original text here: https://www.ran.org/press-releases/analysis-chubbs-new-conservation-and-methane-standards-remain-inadequate-but-should-exclude-support-for-eacop-pipeline/