Munich Re gave an update today to its targets to reduce global fossil fuel emissions within its underwriting and investment portfolios.
"The fact that Munich Re's new climate targets do not close the existing gaps regarding gas infrastructure is a huge disappointment. The reinsurer apparently wants to rest on past achievements, which, however, relate solely to restrictions for the oil and gas extraction sector. This is not how further progress on decarbonization can succeed. The reinsurer must finally end insurance business with gas infrastructure. This is all the more important because such infrastructure demonstrably contributes to driving the upstream exploitation of new oil and gas fields. If the company does not tighten its rules here, Munich Re's impression of itself as a climate pioneer will continue to crumble, which already began in June with its withdrawal from key climate initiatives. What is needed now are clear signals from the new CEO, Christoph Jurecka.
"Reinsurance companies in particular - being a central pillar of global value chains - bear responsibility in the decarbonization process. Their signals are perceived by energy companies worldwide, making ambitious and clear targets for economic transformation all the more important. But here, unfortunately, Munich Re is treading water."
“Reinsurers like Munich Re sit at the very top of the global risk ecosystem, yet today’s failure to tackle all emissions in the oil and gas value chain is a dangerous blind spot. Of particular note, is the glaring omission to reduce midstream and downstream emissions - for example it can still insure the many ships and pipelines that carry LNG across our oceans and lands to import terminals and gas power plants. There is also surprisingly no mention of how the reinsurer intends to move its business fully towards sustainable energy sources with specific targets on solar and wind power generation. From an insurance perspective, genuine leaders see that renewables offer greater affordability, security, and resilience, compared to the volatility and unmitigable risks associated with expensive and volatile new gas and LNG.
"As we’re seeing typhoons, hurricanes, floods, fires and droughts ravage communities all around the world and an insurance crisis develop, with people paying the price, today is a missed opportunity for the world’s second largest reinsurer to take a courageous stance and stop the risk at its source, that is the fossil fuel sector.”
