Swiss Re, the world's second biggest reinsurer said it would no longer insure most new oil and gas projects following mounting pressure on big business to do more to help the world cap global warming.
Last year, the International Energy Agency report said no more new oil and gas fields should be developed if a target of capping planetary warming at 1.5 degrees Celsius (2.7 Fahrenheit) above the pre-industrial average by mid-century is to be met.
In its annual sustainability report on Thursday, Swiss Re said it would no longer insure projects that get the go-ahead from their parent company from 2022, unless the company has an independently verified, science-based plan to reach net-zero emissions.
By 2025, Swiss Re said it wanted half of its overall oil and gas premiums to come from companies aligned with such a net-zero by 2050 plan, and by 2030 all its clients in the sector should have done so.
Also, from 2022, the company said it will no longer insure companies or projects with more than 10% of their production in the Arctic, apart from Norwegian producers.
On the issue of treaty reinsurance, whereby it insures bundles of risk in a job lot, Swiss Re said it expected to finalise a policy for the oil and gas sector in 2023.
The shift by Swiss Re was an important signal from "one of the world's ultimate risk managers," Peter Bosshard, global coordinator of NGO Insure Our Future, said.
"Oil and gas operations need to be phased out in accordance with climate science or they may become uninsurable by the end of the decade."
Bosshard said the onus was on rivals Munich Re, Lloyd's and SCOR, which account for 26% of the global reinsurance market, to commit to even greater action ahead of their annual general meetings.
"The policy is not perfect yet and we encourage its peers to build on it to fully align with a realistic 1.5°C scenario," Lucie Pinson, director of Reclaim Finance, said.
"As the IEA Net Zero Roadmap shows, this should mean drawing a red line against fossil fuel expansion and excluding both projects and companies that cross that line well before 2025." (Reuters)