Aon, the world’s second-biggest insurance broker, argued in a recent report that “a rapid shift away from fossil fuels in favor of renewable energy sources” is needed. “If society does fail to take action,” the broker warned, “the final outcome may be catastrophic.”
Writing this piece from California, Aon’s warning certainly sounds prescient. Yet, while the statement is welcome, the broker is not heeding its own advice.
Unlike 19 major insurance companies, Aon has so far not taken any steps to move away from its coal business. Aon is currently brokering insurance for BMD, the railway contractor of the Adani Group’s giant Carmichael coal mine in Australia. The broker is advising the lenders of the Van Phong coal power plant in Vietnam, the Java 9 & 10 coal-fired power complex in Indonesia, and other controversial fossil fuel projects. It is also arranging insurance for new offshore oil exploration at the Bahamas.
Aon and other brokers assert that as intermediaries they do not share any responsibility for the climate impacts of the projects they facilitate. Given their neutral role, they say, they will not exclude working with any customers. Yet, our experience suggests that, in practice, Aon is not a neutral arbiter but is favoring fossil fuels over climate advocates.
Over the past few years, the Sunrise Project has repeatedly commissioned research on fossil fuel insurance from Finaccord, a market intelligence company and Aon subsidiary. Finaccord provided a professional service which informed the Insure Our Future campaign which we coordinate, and did not engage in the campaign in any other way.
This summer, the Sunrise Project asked Finaccord for updated research on the role of oil and gas insurers, and Finaccord expressed an interest in taking on the assignment. Yet a few weeks later they informed us that Aon had prevented them from carrying out the assignment. The reasons were clearly not commercial, but political. When we intervened with Aon directly, the broker refused to reconsider.
While Aon is happy to work with coal and other fossil fuel companies, they evidently don’t want to offer their services to climate advocates. With its refusal, the company is no longer a disinterested broker in the climate debate but has taken sides with the fossil fuel industry.
While we regret this decision, Aon has now also blown its cover on fossil fuels. By refusing to provide research services to the Sunrise Project, Aon has demonstrated that it will use discretion in deciding which clients it will work with and no longer remain neutral.
While the days of the fossil fuel industry are numbered, renewable energy solutions are the markets of the future. Like other actors, insurance brokers need to reposition themselves for the low carbon transition now.
Customers, shareholders and employees who care about climate change should make it clear to Aon that the company needs to change course and prioritize climate action over the interests of the fossil fuel industry. Like the climate leaders in the insurance industry, Aon should no longer offer services to the coal industry and to new oil and gas exploration projects – projects which would bring about the “catastrophic impacts” the broker has warned about. It is not too late to change to the right side.