Insurance giant Suncorp has decided that it will stop financing and providing insurance to the gas and oil industry by 2025, in a move that adds to the group’s ban on supporting new coal projects.
The insurer had already stopped underwriting, insuring or directly investing in new gas and oil projects and will phase out existing support for the industry by 2025. Now, it has announced that all direct investments in gas and oil will end by 2040, as per its Responsible Business Report.
“Suncorp is aligning our business with the goals of the Paris Climate Agreement because we understand that over the medium to longer term, Suncorp’s customers and our business face an increase in exposure to the physical risks of climate change, such as increasing natural hazards,” a company spokesperson told Insurance Business Australia.
“Suncorp has taken a careful and considered approach to both building resilience to physical risks and supporting the economic transition through our Climate Change Action Plan, Responsible Investment Policy, Responsible Banking & Insurance Policy, and Fossil Fuels Guidelines. These work together to ensure our business is resilient and sustainable into the long term.”
To support implementation of the Responsible Investment and Responsible Banking & Insurance policies, Suncorp says it has a “range” of Sensitive Sector Guidelines to “respond to environmental and social risks” in its business across its investment, banking and insurance portfolios.
“In 2020, we strengthened our Fossil Fuels Sensitive Sector Guideline so Suncorp’s businesses will not directly invest in, finance or underwrite new thermal coal mining projects or electricity generation, or new oil and gas projects. Suncorp has a target to phase out existing thermal coal exposures by 2025, as well as to phase out underwriting oil and gas by 2025, and directly investing in oil and gas by 2040,” the spokesperson continued.
When quizzed on why it will take another 20-years to stop direct investment into the oil and gas sector, the spokesperson told Insurance Business that its current exposure to fossil fuels “is not material.”
“Fossil fuel exposure is less than 0.5% of insurance and shareholder investment assets, and less than 1.5% of total investment assets under management (i.e. inclusive of wealth and investment assets managed on behalf of third parties),” the spokesperson said.
“To further manage the risk of stranded assets in the transition to a net-zero emissions economy, Suncorp has begun to phase out of the most carbon intensive investments and will progressively phase out of all oil and gas exploration and production by 2040.”
Suncorp says it will continue to underwrite, lend to and invest in companies whose business is “clearly consistent with the transition to a net-zero carbon emissions economy by 2050,” and it recognises many companies are working constructively to be part of this transition.
Asked about the company’s stance on investing in pipelines or gas-fired power stations, the insurer’s spokesperson said, “our Fossil Fuel Guideline applies only to the new thermal coal mining, oil or gas extraction projects, or new thermal coal electricity generation.”
