Insurance giant Chubb will stop writing insurance policies for oil and gas extraction projects that do not have “evidence-based” methane reduction plans, increasing pressure on fossil fuel companies to participate in the fight against climate change, according to S&P Global.
Chubb, the world’s largest publicly traded property and casualty insurer with a market capitalization of $77 bn, said it would help clients develop such reduction plans.
The plans would require, at a minimum, programs for leak detection and repair, the adoption of proven measures to reduce flaring, and an end to nonemergency venting of wells.
Nonemergency venting most often occurs when oil or natural gas prices are so low that it is cheaper to vent gas into the atmosphere than to pay for processing, transportation and storage.
Our new underwriting criteria, along with our other substantive actions, are grounded in our commitment to lead the industry in the transition while balancing the need for energy security
Chubb Chairman and CEO Evan Greenberg
The US companies most affected by the decision will be upstream independent oil and gas producers, according to Katie Bays, director of sustainable investment at energy transition consulting firm Adamantine Energy.
Third-party insurance access is certainly a material issue for many upstream players.
This is part of a larger theme of operators facing pressure from a variety of sources to keep pace with their industry partners’ emissions reduction goals.
Perhaps that pressure comes from shareholders, or from lenders, or from regulators, or, now, from insurers. But in any event, the pressure is there, and it’s becoming more diversified.
Chubb Chairman and CEO Evan Greenberg
Adamantine Energy CEO Tisha Schuller said many US operators are ahead of Chubb on environmental, social and governance efforts. Best-in-class operators are already prioritizing addressing methane emissions as part of their energy-transition leadership.
One of the groups that put pressure on Chubb is the shareholder advocate As You Sow Foundation, which filed for a shareholder vote on new greenhouse gas reduction targets at Chubb’s annual meeting this year after a successful vote in 2022 on a similar greenhouse gas emission issue.
As You Sow President Danielle Fugere was pleased that Chubb is focusing on climate change but questioned how committed the insurance company is when it will not disclose its own or customer emissions.
by Yana Keller
