The transformation needed to become a low carbon economy ‘can only happen by enabling companies from the energy sector to implement ambitious transition plans’, says insurer chief executive
Axa has extended its oil and gas exclusions to help fight climate change and support the transition towards a low carbon economy.
Axa has stated it will stop investing in and underwriting new upstream oil greenfield exploration projects, unless they are carried out by companies with credible transition plans.
The insurer currently excludes all new direct investments in listed equities and corporate bonds in developed markets in oil and gas companies operating in upstream, oilfield services and downstream sub-sectors, as well as most midstream players.
Axa currently selects integrated oil and gas companies for investments based on a restrictive selection process. From 2023, Axa will apply this same selection process - alongside considering the Science-Based Targets initative (SBTi) framework as it becomes available - for its underwriting of new insurance on upstream oil greenfield exploration projects.
Protecting the Arctic region
The company has also promised to significantly reduce its investment and insurance exposure to unconventional exploration and production from 2022.
Axa therefore hopes to strengthen the thresholds applicable to its insurance activity in the Arctic region – this will be done by excluding new investments and underwriting coverage for oil and gas extraction activities carried out in the Arctic Monitoring and Assessment Programme (AMAP) region by companies deriving over 10% of their production from the AMAP region or producing more than 5% of the worldwide volume of AMAP-based oil and gas.
The insurer will also cease direct investments in companies producing more than 5% of the worldwide volume of oil sands. For underwriting, its current exclusions will be extended to all lines of business.
In terms of fracking, Axa will no longer directly invest nor provide any insurance coverage to the activities of companies deriving more than 30% of their production from shale oil and gas.
Lastly, the company has increased its green investment target to €26bn (£22bn) by 2023, compared to the €24bn (£20bn) it announced at the end of 2020.
Axa’s chief executive Thomas Buberl said: “The climate emergency requires us to step up our actions and support the transition towards a low carbon economy.
”The unprecedented and complex transformation needed can only happen by enabling companies from the energy sector to implement ambitious transition plans.
”Going forward, Axa is determined to focus its support only on actors with the most far-reaching and credible transition strategies.”