Obtaining insurance for oil and gas companies just got a little harder after AXA SA, a global French insurance company, said it would exclude most greenfield exploration and projects involving oil sands and shale gas. AXA’s U.S. operations generated €18.5 billion in 2020 revenue.
AXA is the first global insurer to curtail coverage of fossil fuel projects, and the company’s Oct. 29 announcement comes just three days before the high-stakes COP26 climate conference. Investors, large brands and other private-sector players are eager to show the steps they are taking to reduce greenhouse gas emissions while adding pressure on policymakers to transition the energy sector away from fossil fuels.
AXA said it would stop investing in and underwriting all new upstream oil greenfield exploration projects “unless they are carried out by companies with the most far-reaching and credible transition plans.” It will also tighten restrictions on developments in the Arctic zone, tar sand operations, and shale oil and gas operations that depend on fracking for more than 30% of their production.
Starting in 2023, the insurer said it will use guidance from the Science Based Targets Initiative to select the companies in which it will invest. The initiative was formed to show the private sector best practices for reaching net-zero emissions by 2050.
“And so it begins,” tweeted Justin Guay, head of global climate strategy for The Sunrise Project, an environmental group. “Coal is increasingly uninsurable because global insurers have excluded it. Today, AXA has started the same set of dominoes falling for oil and gas producers.”