Letter sent to AXA’s CEO Thomas Buberl: The credibility of your climate leadership is on the line
Dear Mr. Buberl,
Under your leadership, AXA has played a pioneering role in taking climate action within the insurance industry for many years. As the International Energy Agency (IEA) has just found in its World Energy Outlook, climate leadership today must mean ending support for the expansion of oil and gas production.
In 2015, AXA was the first major insurance company to divest from the coal industry. You were also the first insurer to restrict underwriting coal projects in 2017 and to adopt a comprehensive coal exit policy in 2019. Earlier this year you took the initiative to launch the Net-Zero Insurance Alliance.
As a first mover, AXA has served as a role model which other insurance companies have followed. Peer pressure and NGO campaigns have helped to ensure that the restrictions which AXA initiated have gone mainstream, with at least 33 insurers adopting coal exit policies for their underwriting and many more for their investments.
As the withdrawal from the coal sector has gone mainstream, AXA has only lost limited business over its climate action but has positioned itself as a leading insurer for tomorrow’s low-carbon economy. An analyst report by Société Générale in December 2020 increased AXA’s target price by 6% due to its strong coal exit policy and other ESG measures, adding billions in dollars to the company’s shareholder value. Your leadership on coal is not only benefiting the climate, but also AXA.
What was true for coal in 2017 is true for oil and gas today. In its 2021 World Energy Outlook, the International Energy Agency just confirmed that in a Net Zero Emissions scenario, “no fossil fuel exploration is required and no new oil and natural gas fields are required beyond those that have already been approved for development”. Such a scenario would not only mitigate the “stark consequences” of climate change; it would also have benefits in terms of public health, job creation and energy access.
AXA’s oil and gas business is not in line with these findings. The AXA Group ranks among the top-10 underwriters of the oil and gas industry. New research will soon show that the company insures the exploration of massive oil reserves in fragile ecosystems near the mouth of the Amazon which are home to blue whales, manatees and other endangered species.
Engaging fossil fuel companies on the transition to renewable energy is justified if it is tied to strict science-based and time-bound conditions. Support for companies should not be maintained if they continue to expand oil and gas production after years of engagement. This is as true for the oil and gas industry now as it was for the coal sector in 2017.
AXA committed to announce a new energy policy in 2021. We understand that you are likely to launch this at the Climate Finance Day in Paris on October 26. In the light of the new IEA report, we call on you to adopt the following measures as a minimum:
- Stop services to all new oil and gas production and transportation infrastructure projects, including liquefied natural gas terminals.
- Phase out services to companies engaged in the development of new oil and gas production and transportation infrastructure by 2023 at the latest.
If AXA ends its support for the expansion of oil and gas production, our groups will ensure that such policies again go mainstream within the insurance industry. Likewise, Société Générale has suggested that “reducing exposure to Oil & Gas should be the next environmental objective for insurers” and could “unlock an additional ‘green premium’ for the sector”.
Six years after the signing of the Paris Agreement, we are still on a trajectory of more than 3°C of global warming. Extreme weather events are becoming ever more frequent and serious, and every fraction of a degree above the 1.5°C threshold poses unprecedented risks to humanity and biodiversity.
In June 2021, you stated that “we are expected to lead on climate, not to follow – this is the meaning of our “Climate Leadership” commitment”. As AXA finalises a policy on oil and gas, the credibility of your Climate Leadership – and with it, the leadership of the Net-Zero Insurance Alliance – is on the line.
In its closing remarks at the Insurance Development Forum, the UN Secretary-General António Guterres said that “we need net zero commitments to cover your underwriting portfolios, and this should include the underwriting of coal — and all fossil fuels”. He made it clear that net-zero pledges will be assessed against the adoption of measures to phase-out insurance coverage to the fossil fuel industry.
We call on you to follow the science and end your support for the expansion of oil and gas production.
Thank you for your attention.
With kind regards,
Lucie Pinson, Executive Director, Reclaim Finance
Peter Bosshard, Coordinator, Insure Our Future campaign
Emma Ruby-Sachs, Executive Director, SumOfUs
