Zurich Insurance Group announced it is accelerating actions to progress towards a low-carbon economy “amid an increasing climate crisis.” Its actions range from committing to UN targets for global temperature rise, to helping clients cut their exposure to fossil fuels, to using 100% renewable energy by 2022.
Diving into the details, Zurich said it is committing to targets set in the UN’s Global Compact Business Ambition Pledge, which aims to limit global temperature rise to 1.5°C above pre-industrial levels by 2030. It said it is the first insurance company to commit to these UN targets.
In addition, over a 24-month period, Zurich said it will proactively engage with clients and investee companies with the aim to assist them in adopting plans to reduce their exposure to thermal coal, oil sands and oil shales.
Also, Zurich has committed to utilize 100% renewable power in all global operations by the end of 2022. The insurer has formally joined the RE100, a global leadership initiative bringing together influential businesses committed to 100% renewable electricity.
In addition, Zurich is taking aggressive actions to eliminate single-use plastics and reduce internal paper usage by 80%.
With extreme weather events already causing devastation around the world, Zurich will also continue to help those communities most impacted by flooding through its award-winning program to enhance flood resilience, which has already benefited 225,000 people across nine countries.
The recent report by the UN Intergovernmental Panel on Climate Change (IPCC) gives the world only 11 years to successfully transition to a new path or risk planetary warming with unimaginable consequences. This will require an immediate and major transformation across energy, land, industrial, urban and other systems, said Zurich in a statement.
“As one of the world’s leading insurers we see first-hand the devastation natural disasters inflict on people and communities. This is why we are accelerating action to reduce climate risks by driving changes in how companies and people behave and support those most impacted. It is simply the right thing to do,” said Mario Greco, CEO Zurich Insurance Group.
Zurich said it recognizes the role that science-based targets play to meet the Paris Agreement’s targets by specifying how much and how quickly companies need to reduce emissions. Currently, however, in the insurance sector, science-based targets do not typically exist for either underwriting or Investment Portfolios.
As a result, as part of Zurich’s Pledge, the company is playing an active role in developing industry methodology for measuring the carbon footprint of liabilities to enable setting such targets. Zurich has also joined the Stakeholder Advisory Group of the Science Based Target initiative*, a project to help financial institutions align their lending and investment portfolios with the Paris Agreement targets.
The company also is updating its position on some of the most carbon-intense fossil fuels. In line with Zurich’s prior thermal coal policy, Zurich will engage with both clients and investee companies with more than 30% exposure to thermal coal, oil sands and oil shales in a dialogue over a two-year period with the aim to drive a deeper conversation regarding their credible mid to long-term transition plans.
The updated position says that Zurich generally will no longer underwrite or invest in companies that:
- generate more than 30% of their revenue from mining thermal coal, or produce more than 20 million tons of thermal coal per year;
- generate more than 30% of their electricity from coal;
- are in the process of developing any new coal mining or coal power infrastructure;
- generate at least 30% of their revenue directly from the extraction of oil from oil sands;
- are purpose-built (or “dedicated”) transportation infrastructure operators for oil sands products, including pipelines and railway transportation;
- generate more than 30% of their revenue from mining oil shale, or
- generate more than 30% of their electricity from oil shale.
Zurich began instituting environmental, social and governance (ESG) considerations into its core business practices in 2012. The company became carbon neutral in 2014. Zurich’s actions are aimed at influencing behaviors by future proofing the company’s own operations, applying both its investment and underwriting capabilities to manage climate risk, and preparing communities to mitigate against the physical effects of extreme weather, the company said.
* The Science Based Targets initiative mobilizes companies to set science-based targets and boost their competitive advantage in the transition to the low-carbon economy. It is a collaboration between CDP, the United Nations Global Compact, World Resources Institute (WRI) and the World Wide Fund for Nature (WWF) and one of the We Mean Business Coalition commitments. The initiative defines and promotes best practice in science-based target setting, offers resources and guidance to reduce barriers to adoption, and independently assesses and approves companies’ targets.
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