Allianz has changed its investment and insurance policy to stop financing companies extracting oil and gas, while accelerating its path to net zero in view of the current energy crisis, geopolitical tensions and a necessary transition to renewable sources to contain climate change, it said in a statement last Friday.
The German insurer has decided that it will not issue or renew new single site and stand-alone property and casualty (P&C) insurance policies or coverages, or provide new funding for projects for the exploration and development of new oil and new gas fields (upstream), construction of new infrastructure related to oil, and construction of new oil power plants starting from 1 January 2023.
It will not renew existing contracts from 1 July of the same year and it will also pull funding from oil and gas activities in the Arctic, excluding operations in Norwegian territories, and Antarctic, coal-bed methane, extra-heavy oil and oil sands, and ultra-deep sea, it added.
“In view of the current geopolitical situation, the energy supply for households and companies must be reprioritised in the short term,” said Günther Thallinger, member of the board of management of Allianz, investment management and sustainability.
“Policymakers must now work together with the business community to define conditions that enable planning, and in addition enable the acceleration of renewables globally,” he added.
From 2025 Allianz will only insure and invest in oil and gas companies committing to net-zero greenhouse gas (GHG) emissions by 2050 on scope 1 (direct emissions), 2 (indirect emissions) and 3 (value chain emissions), and that produced more than 60 million barrels of oil equivalent in 2020.
The companies should instead ideally align operations and disclosures to the requirements of the Climate Action 100+ Net-Zero Company Benchmark, particularly for capital expenditures and corporate lobbying.
Under the new policy Allianz will also exclude funding or insurance, or facultative reinsurance, for companies generating more than 10% – compared with 20% previously – of revenues from oil sands across all businesses.
The new guidelines add to measures taken to phase out from coal in the OECD area by 2030 and globally, including Asia, by 2040, as reported. Allianz is now also stepping up efforts to reach net zero GHG emissions from its sites and operations by 2030, instead of 2050 as previously planned.
It will continue to underwrite risks and finance oil and gas companies with “green energy project” to steer the transition towards renewables.
Deploying “renewable energy sources at scale and speed”, increasing energy efficiency alongside the “overhaul of our economy” are necessary steps to contain global warming, it said in the statement.
The insurer will invest in technologies for onshore and offshore wind, solar, green and blue hydrogen, if their life cycle emissions compare with green hydrogen, and in green and low-carbon energy projects.
According to its sustainability report, Allianz has invested more than €849bn in different asset classes in 2021, up from €835bn in 2020. Sustainable investments amounted to €123bn, including 110bn with an environmental goal, €12bn with social goal and €1bn with a combination of social and environmental goals.