Global insurer Chubb has committed to battling climate change by refusing to provide insurance coverage for oil and gas projects in government-protected conservation areas in the World Database on Protected Areas prohibiting sustainable use.
The insurer also released new underwriting criteria for oil and gas extraction projects that will require clients to reduce methane emissions, a by-product of oil and gas production that are among the most severe greenhouse gases (GHG). The criteria are part of an ongoing partnership and consultation with environmental stakeholders and experts.
We’re pleased to announce new underwriting criteria for oil and gas extraction projects that will require clients to reduce methane emissions.
— Chubb (@Chubb) March 22, 2023
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Evan G. Greenberg, chairman and CEO of Chubb, said the methane-related underwriting criteria are the first of their kind in the industry.
“[They] are focused on the balance between the need to transition to a low-carbon economy and society's need for energy security,” Greenberg said.
“As a company, we are accelerating and expanding our climate-related initiatives without committing to sweeping net-zero pledges for which, in our judgment, there is not a viable path to achieve. We will continue to pursue in earnest a responsible, realistic, and science-based approach. Implementing these underwriting criteria encourages oil and gas producers to adopt technologies to reduce GHG emissions in extraction. We know that many of our clients in the industry are already committed to limiting methane emissions, and we will work to expand those commitments.”
Chubb will provide insurance coverage for clients implementing evidence-based plans to manage methane emissions, including, at a minimum, having programs for leak detection and repairing and eliminating non-emergency venting.
“Clients must adopt one or more measures that have been demonstrated to reduce emissions from flaring. These criteria will commence immediately, and customers will have a set period to develop an action plan based on their individual risk characteristics,” Chubb said in a statement.
Chubb will also create a customer resource center to support oil and gas insureds in identifying and adopting methane emissions reduction technologies.
Chubb will not underwrite oil and gas extraction projects in protected areas designated by state, provincial, or national governments, effective immediately.
The insurer's policy applies to conservation areas covered by International Union for the Conservation of Nature (IUCN) management categories I-V in the World Database on Protected Areas, which includes nature reserves, wilderness areas, national parks and monuments, habitat or species management areas, and protected landscapes and seascapes. The sixth IUCN category applies to protected areas that allow sustainable use.
By the end of 2023, Chubb aims to develop and adopt standards for projects in category VI areas in the World Database of Protected Areas and for oil and gas extraction projects in the Arctic, Key Biodiversity Areas, mangrove forests, and global peatlands that are not currently listed in the World Database on Protected Areas.
“Our policy on not insuring energy projects in protected areas also reflects our approach to setting clear guidelines to sustain biodiversity and protect nature,” Greenberg said. “Taken together, 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.”
Last month, Chubb announced the name of the new global climate business it launched in January, which aims to provide insurance products and services to businesses engaged in developing or employing new technologies and processes supporting the transition to a low-carbon economy.
