The news, first reported by Bloomberg, signifies a notable shift in the company’s approach to climate change mitigation.
According to Bloomberg, the insurer will also engage with its highest-emitting corporate clients, urging them to reduce their carbon footprints. Further details regarding these measures will be outlined in Zurich’s forthcoming climate-transition plan, set to be unveiled later this year.
Sierra Signorelli, Zurich’s Chief Executive of Commercial Insurance, said the decision’s alignment with the company’s overarching goal of achieving net zero emissions by 2050. In an interview, Signorelli stated, “Further exploration and development of fossil fuels isn’t required for the transition. We think it’s the right time to evolve our position.”
This move represents a notable departure for Zurich, which currently provides insurance for fossil fuel infrastructure across various regions, including North Sea drilling and US natural gas terminals. Despite generating approximately $2.1 billion in premiums from such clients last year, equivalent to 7% of its total commercial premiums, Zurich insists the policy update will have limited impact on its financial performance.
Zurich clarified that the new restrictions apply solely to new fossil fuel projects, affirming its continued support for existing ones. The company asserts that these measures are unlikely to significantly affect its bottom line.
The insurance industry has faced challenges in navigating the complexities of climate change. Zurich’s decision follows its withdrawal from the Net Zero Insurance Alliance last year, amidst criticism and legal scrutiny. CEO Mario Greco has defended the move, asserting the company’s commitment to its principles.
Zurich’s policy revision has garnered praise from climate advocates. Nora Scheel, a climate campaigner at Swiss nonprofit Campax, described the changes as an “important step” toward aligning with European peers.
Looking ahead, Zurich aims to engage with its highest-emitting corporate clients, setting interim emissions targets and urging commitments to achieve net zero by 2050. Signorelli stressed the importance of tangible progress, stating that Zurich may consider exiting partnerships if substantial advancements are not made.
Insurers like Zurich are pivotal in shaping the transition to cleaner energy sources. Beyond tightening restrictions on fossil fuel projects, Zurich intends to expand coverage for clean-energy infrastructure, including carbon capture and hydrogen power, signaling its commitment to sustainability.
Zurich’s moves align with broader initiatives such as the Glasgow Financial Alliance for Net Zero, highlighting the increasing importance of sustainable practices within the financial sector.
