Insurance giant rules out support for new coal, tar sands, and Arctic energy exploration projects and commits to Net Zero emissions by 2050 for underwriting and investments

American International Group Inc. (NYSE: AIG) today announced major new company-wide climate commitments, including commitments to no longer provide underwriting and investments in the construction of any new coal-fired power plants, thermal coal mines, or oil sands. Further, the company will stop providing insurance cover and investments in any new Arctic energy exploration.

The commitments, which come after years of pressure from Public Citizen, Insure our Future, and other environmental groups, will also phase out existing underwriting and investments in companies by January 1, 2030 with 30 percent or more of revenue from coal or oil sands, or 30 percent electricity generated from coal.

“As one of the last major insurers without restrictions on coal insurance, AIG’s new commitments to reduce underwriting for coal, tar sands oil, and Arctic oil and gas are a major step forward for people and the planet,” said Hannah Saggau, insurance campaigner with Public Citizen. “AIG has vaulted itself from a laggard in the industry to a leader in the U.S., and we look forward to working with it to meet and improve on these commitments.”

In addition to pumping the brakes on coal and tar sands projects, AIG is also committing to reach net zero greenhouse gas emissions across its underwriting and investment portfolios by 2050 and adopt science-based emissions reduction targets in line with the goals of the Paris Agreement. In the company’s statement, AIG committed to release more information about its phase-out of fossil fuels in the coming months and to provide transparent reporting of its progress.

For over a year, Public Citizen has used direct actions, petition drives, policy advocacy, and behind the scenes pressure aimed at AIG and its CEO Peter Zaffino to demand the company stop supporting the fossil fuel expansion driving the climate crisis.

Today’s announcement marks the beginning of a new chapter in the campaign to improve AIG’s fossil fuel policies. AIG joins over 37 companies that have committed to end or restrict insurance for new coal projects, including Travelers, which recently adopted a policy. Among major U.S. insurance companies analyzed in Insure Our Future’s 2021 Scorecard on Insurance, Fossil Fuels, and Climate Change, only Berkshire Hathaway and W.R. Berkley still underwrite coal with no restrictions.

While these commitments represent major steps, the new AIG policy needs clarification and improvement.

“Ending support for coal expansion projects is strong and necessary—and it should be extended to all fossil fuels,” said Saggau. “The International Energy Agency has made it clear that to avoid climate catastrophe, there is no room for any fossil fuel expansion. AIG’s commitment to science-based climate targets should mean an end to all fossil fuel expansion, but today’s announcement doesn’t address that question.”

The new policies could have real impacts on ongoing projects around the world.

Notably, AIG’s commitment makes it the first U.S. insurer to rule out insurance for Arctic energy exploration, which pose grave threats to Indigenous rights and local ecosystems. At least 12 insurers have restricted support for oil and gas drilling in the Arctic Refuge. At the same time, however, today’s release from the company does not clearly define what areas of the Arctic nor what kind of energy exploration activities are covered by its commitment, nor does it implement a broader policy to ensure that all of the projects it insures have obtained the Free, Prior, and Informed Consent of impacted Indigenous communities.

In Canada, in the most recently publicly available insurance certificate, AIG provided coverage for the Trans Mountain Pipeline. The pipeline is a major environmental hazard and a violation of First Nations’ rights, and its expansion project consists of an entirely new pipeline that would ship more than 590,000 barrels per day of highly polluting tar sands crude oil to the coast of British Columbia. While the commitments released today ruled out insurance for the  construction of any new oil sands projects, it is not clear if this includes tar sands transport projects like the Trans Mountain expansion.

“As one of the remaining potential insurers of the Trans Mountain pipeline, AIG’s commitment to rule out insurance for some tar sands projects is a first step but not enough,” said Charlene Aleck, spokesperson for the Tsleil-Waututh Nation Sacred Trust Initiative. “The Trans Mountain pipeline violates Indigenous rights and threatens our land, water, and climate. With the cost ballooning to C$21.4 billion, and the need for more private investment, this pipeline is as risky as ever. AIG must wake up to the significant financial, reputational, and environmental risks of the highly polluting tar sands sector and explicitly rule out insurance for all new tar sands transport projects.”

Written by Insure Our Future

Meeting reveals Neal’s failure to understand the need to stop insuring fossil fuel expansion

On February 16, Insure Our Future network members challenged John Neal, CEO of Lloyd’s of London, on the insurer’s fossil fuel policies and actions in a long awaited, but ultimately very disappointing, on-the-record meeting at Lloyd’s Lime Street headquarters.

The meeting between Neal, Lindsay Keenan, European Coordinator of Insure Our Future, and Mia Watanabe, UK Campaigner at Market Forces, revealed major problems with how Lloyd’s, and in particular its CEO, is addressing the climate crisis. The meeting started with Neal accepting a letter with 137,400 signatures on behalf of SumOfUs, an Insure Our Future network member. The letter demanded Lloyd’s stop supporting new and expansionary coal, oil and gas projects, including the East African Crude Oil Pipeline, Trans Mountain pipeline, Adani Carmichael coal mine, and oil drilling by the Bahamas Petroleum Company.

In stark contrast to statements made by Lloyd’s Council Chairman, Bruce Carnegie Brown, and what is clearly written in Lloyd’s December 2020 ESG report, Neal stated that in his view Lloyd’s ESG policy was nothing more than a “‘provocative discussion document”.

Revealingly, Neal claimed that, following the publication of the report, he had been contacted and lobbied by regulators, corporations, and state and national officials from around the world who said they were against the ESG policy and concerned about its ambitions. He confirmed that Lloyd’s had subsequently informed its members the ESG commitments were non-mandatory guidelines.

Despite lending a sympathetic ear to industry stakeholders, Neal was unequivocal in stating that he did not see it as his role to meet with representatives of communities impacted by the fossil fuel projects that Lloyd’s insures or invests in.

While professing to respect climate science and the International Energy Agency’s (IEA) 2021 report, Neal appeared to not understand nor accept the report’s key finding that there are no new coal mines or oil and gas fields approved for development in a Net Zero by 2050 pathway. Under Neal, Lloyd’s has no plan to align its policies with the IEA findings.

“It is a serious problem that John Neal has not been well enough briefed, or is just personally sceptical, about climate science and the findings of the International Energy Agency. An ESG policy touted by Carnegie-Brown as a ‘plan for becoming a truly sustainable insurance market’ has, under John Neal, become nothing more than a ‘discussion document’ that syndicates can take or leave as they see fit. It is abundantly clear that John Neal prioritises profits at the cost of people and planet, and that under his leadership Lloyd’s policies fail to match its climate rhetoric,” said Lindsay Keenan, European Coordinator of Insure Our Future.

Neal further exposed his disregard for climate action by failing to make a clear commitment that Lloyd’s members would not insure the East African Crude Oil Pipeline and saying Lloyd’s has no current plans to adopt an exclusion policy for oil and gas expansion.

On the Adani Carmichael coal project in Australia, a source of significant controversy for Lloyd’s over the last two years, Neal said that “to the best of my knowledge” the project is no longer insured in the Lloyd’s market. While Neal encouraged syndicates not to underwrite Adani, he refused to give a clear commitment on its status inside Lloyd’s, both now and in the future.

“The #StopAdani campaign has done the work John Neal should have done, and convinced the vast majority of its insurers to commit to never insuring the disastrous Adani Carmichael thermal coal project. Now, Neal needs to come clean and officially clarify if the Lloyd’s market remains exposed to Adani, and make the promise to not insure the climate-wrecking project in the future. If Lloyd’s cannot take this basic step, then its ESG policies have failed their most simple test and Adani Carmichael will continue to be a stain on its reputation,” said Mia Watanabe, UK Campaigner at Market Forces

Lloyd’s stated commitment to transparency is contradicted by its actions. Neal said Lloyd’s expects its members to have robust net-zero ESG plans, but will not ask them to publish those policies. He confirmed that data on insured emissions will be collected at syndicate level, but published only as obscure market wide data. Neal tried to justify the lack of transparency by saying he didn’t want to put additional pressure on Lloyd’s members.

Neal stated many times in the meeting that UK competition law prevents him from mandating marketwide action. Previously, Lloyd’s excuse was that it didn’t have the power to require the implementation of its ESG policy, which was proved false by its own bylaws. Neal now points to competition law as the barrier preventing Lloyd’s from mandating its members stop insuring and investing in specific fossil fuel sectors.

Keenan added, “Neal has no intention of taking marketwide action and is using competition law as his latest excuse. However, it does raise a significant question that must be asked of the UK Competition and Markets Authority regarding whether there is any legal barrier to coordinated industry action to meet climate targets.”

The meeting concluded with Keenan’s challenge for Neal to invite Insure our Future members, climate scientists and impacted communities to meet with Lloyd’s Council and ESG committee, and for Neal to join him in a public debate to clarify and discuss Lloyd’s policies. Neal said he would consider each of these, and appeared to mean it.

Published 29.12.2021

The governments of Wales and the UK both believe that the other has the power to stop the coal mine extension from going ahead. In the meantime, and in the shadow of the recent COP26 in Glasgow, a licence to extract a further 40 million tonnes of coal could slip through any day. The estimated 100 million tonnes of CO2 and methane this would emit over the next 18 years, would discredit the much-boasted 2050 Net-Zero commitment, Boris Johnson’s recent statement in the press against new coal, and the Welsh Ministerial statement against coal in March 2021. The signal this may send to other world leaders, that they can make commitments then ignore them, is hard to quantify but may be even more significant. Ministers Lee Waters of the Welsh Government, and Michael Gove of the UK Government, need to come together to stop this coal mine and make good on their respective governments' climate commitments.

The distance between the coal mine and the nearest residence in Aberpergwm is just 330 metres. Although this is a deep coal mine rather than opencast, this proximity can still be associated with impacts from coal dust from coal stockpiles stored above ground, noise, HGV movements, and light pollution. Future impacts of the underground working are also uncertain with increasingly extreme weather events associated with climate change.

For people living in many parts of the Global South, on flood planes, or near sea-level, climate change is not an abstract threat for future generations – it's impacts are life and death, and are experienced now and locally to them. The line between who we think of as ‘local communities’ is beginning to blur as the impacts are increasingly experienced beyond the site of operations. The economic and health impacts of the coal mine extension going ahead or closing will be immediate, direct, and tangible on the residents in Aberpergwm. The impacts of the CO2 and methane from this coal mine will be delayed, indirect, and, although modelling tools attempt to quantify it, fairly intangible on communities threatened now by climate change. However, the consequences are profound for both groups, and must be considered.

Cutting through the greenwash, a significant portion of the coal will be burned at steelworks releasing huge amounts of CO2 and other pollutants, jeopardising the rapid decarbonisation required of the global steel industry and other industries which are reliant on coal.

A visit to Companies House online will reveal a complicated operating structure of many small companies with similar names and shared registered addresses associated with Energybuild Ltd, the coal operator in Aberpergwm. The company itself has negligible assets, so the possibility of recovering funds if the company suddenly folded with liabilities is limited. The situation with its holding company, Energybuild Resources Ltd is also concerning, with net liabilities of £2.7 million and assets valued at £950 thousand as of the end of 2019 – meaning that if the company were to fold, around 65% of those liabilities may not be fulfilled, including restoration works.

Wales played a major role in mining the coal that powered the UK through an industrial revolution. Coal is a central part of a proud heritage in many communities throughout Wales, and for a few remaining areas, coal mining is still the major industry.

The closure of many coal mines under the Thatcher Government put thousands out of work, generating bitterness and deprivation that continues to this day. Much of this hardship could have been avoided if coal mining had been phased out and replaced by reinvesting some of the wealth that mining generated back into the communities that toiled to extract it.

Local shops and pubs, in particular, in recent press coverage have come out in support of a licence for the coal mine extension, highlighting their reliance on the custom of coal miners that work there. But without the support for creating alternative jobs that’s been absent so far, these businesses will be in the same position when the coal mine does eventually close.

Will the UK Government learn from its past mistakes in coal, and make good on its promise to ‘level up’ the UK with an approach that includes investment in infrastructure, retraining in desirable and viable jobs, and financial support for small and medium sized enterprises, particularly cooperative and social-interest companies that build and reinvest in their communities? Only when the UK and Welsh governments step up will communities in Aberpergwm have a genuine choice on whether to tolerate a coal mine nearby for another 18 years.

Last Friday 29th October, on the eve of COP26 climate talks, Coal Action Network, Extinction Rebellion North East and Newcastle Youth4Climate set up a climate justice memorial at Chubb Insurance (116 Quayside). The climate memorial was created to remember communities on the front lines of climate breakdown, who are being directly impacted by harmful projects and climate impacts. Members of local campaigns against coal mining - from West Cumbria, Dewley Hill and Pont Valley - also spoke at the memorial.

Jack from Newcastle Youth4Climate said "In our memorial, we remember the damage the climate crisis has caused and reflect on what the future may hold for our planet and its young people. By doing this, we are reminding the companies on our doorstep that they are directly profiting from and responsible for the loss of lives, nature and communities from the climate crisis."

Chubb Insurance is a syndicate of the Lloyd’s of London insurance market. Composed of many underwriters and insurance companies, Lloyd’s and its members are known for insuring projects that no one else will, which increasingly includes climate-destroying fossil fuel projects. Without this insurance, these projects would struggle to succeed, making insurance a major weak spot for the mining industry.

In 2020, Lloyd’s published an Environmental, Social and Governance Report. Campaigners said today that its commitments are not enough. Lloyd’s still allows members to acquire new business in these sectors, and is continuing to provide them cover until 2030. There is no mention of insurance and investment in coking coal, or other gas and oil projects, despite Lloyd’s being amongst the four largest insurers of fossil fuel projects. 

Protesters were joined by activists from West Cumbria, Defend Dewley Hill and Protect Pont Valley, who spoke about their experiences of resistance to extractivist coal projects in their communities, and why financial companies like Lloyd’s need to urgently rule out insuring them. The memorial also used soundscapes from testimony previously compiled, including those of members of the Pacific Climate Warriors and of the Wangan and Jagalingou People (who are the traditional custodians of the land where Adani want to build the Carmichael coal mine), insured by Lloyd’s and Chubb.

June Davison, from the Campaign to Protect Pont Valley said: “We have seen first hand the damage that opencast coal extraction can cause, and the destruction for local communities. We have learned that the opencast site that Banks operated near our home was minute compared to mining in other parts of the world, including the Hambach Forest in Germany and the Adani mine in Australia. We know that financial institutions have supported opencast in the North East of England, and it is short sighted that Lloyd’s would insure the most devastating fossil fuel in existence.”

Members of the public laid hundreds of flowers and messages to Lloyd’s of London from over 4,500 people across the world were hung outside the offices, as well as delivered to Lloyd’s Chairman, Bruce Carnegie Brown. These messages are also viewable online at: https://lloydsclimatememorial.org/ .   

This action is the latest to target Lloyd’s of London and Chubb Insurance, including a previous action that happened in May at the same location. The action today forms part of a Defund Climate Chaos day of action, with groups across the world taking similar actions on the doorsteps of a range of financial and insurance institutions. On the same day, in the morning in London, Coal Action Network facilitated a climate memorial at Lloyd’s HQ.