Insurance Provider Chubb Cracking Down on Methane Emissions
Insurance companies – the world shares a collective disdain for them no matter how many charming lizards or ducks they throw into their commercials.
And if you thought car insurance was polarizing, try underwriting oil and gas.
What happened: Chubb, the world’s largest publicly traded property-casualty insurers introduced tighter restrictions on methane emissions for its insurance policies with oil and gas companies.
- A quick refresher: Methane — a greenhouse gas 25 times more potent than carbon dioxide—is the primary component of natural gas and which the International Energy Agency attributes 30 percent of the rise in global temperatures. Overall, not great when it leaks.
Chubb has been no exception to the pressures of environmental groups and shareholders calling to cease the funding and insuring of high-emitting companies. Fortunately for those companies, the response from Chubb has been far more nuanced.
The response: Chubb CEO Evan Greenberg said the company will not be participating in a wholesale quitting of sales to producers. New projects must present “evidence-based plans” to reduce emissions with a bare minimum of leak detection programs and no non-emergency venting.
- Chubb will also become the first US insurer to no longer offer coverage to projects in government-protected areas.
Criticism is being drawn from both sides
Environmental groups are skeptical of how effective this new policy will be in making real change since most oil and gas companies already meet the bare minimum standards set by Chubb. The anti-ESG crowd continues to argue against all policies driven by ESG considerations.
Bottom line: The approach by Chubb appears to be a balancing act between the two key drivers in the ongoing conversation of energy: sustainability and security. Sustainability calls for reduced emissions, but the need for secure energy doesn’t allow for the outright quitting of oil and gas while renewables are still unable to meet all of our energy needs.