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May 25, 2022

Chubb shareholders vote for GHG report

Investor proposal targets insurer’s financial activities

Chubb shareholders have voted in favor of a proposal seeking disclosure about the insurer’s plans to reach net-zero greenhouse gas (GHG) emissions in relation to its underwriting and other financial activities.

According to a regulatory filing, 72.2 percent of votes cast at the company’s May 19 AGM were in support of the proposal, which requests that Chubb release a report ‘addressing whether and how it intends to measure, disclose and reduce the GHG emissions associated with its underwriting, insuring and investment activities in alignment with the Paris Agreement’s 1.5°C goal, requiring net-zero emissions.’

Shareholder advocacy group As You Sow, which filed the measure, states that insurance companies have a ‘critical role’ to play in meeting the Paris climate accord’s goal. ‘The US insurance industry is under increasing pressure to address its contributions to climate change from its underwriting, insuring and investing activities,’ As You Sow writes. ‘These financial activities contribute to systemic portfolio risk to the global economy, investors and insurers’ profitability.’

The group describes Chubb as a ‘climate laggard in the global insurance sector’, in that company peers are starting to address the GHG emissions associated with their underwriting and investment activities, and states that 13 global insurers have joined the United Nations’ Net-Zero Insurance Alliance through which they commit to transition their emissions from insurance and reinsurance underwriting portfolios to net-zero by 2050.

In a statement following the AGM, As You Sow president Danielle Fugere says: ‘This high vote should be a wake-up call to Chubb and other large insurance companies. Chubb can no longer ignore its role in financing high-carbon activities. The climate risk associated with its underwriting and investing has become unacceptable to investors, [which] now seek action from Chubb to reduce its significant contribution to climate change.’

Asked for comment on the vote, a Chubb spokesperson referred to a company statement that reads in part: ‘With respect to this resolution, the company currently provides extensive disclosure regarding climate issues, including an annual report aligned with the [TCFD] reporting framework… The board and management will consider what additional reporting will be appropriate in response to the shareholder proposal. The board and management respect and value input from the company’s shareholders and look forward to continued engagement on climate issues.’

Danielle Fugere, As You Sow



BOARD OPPOSITION
Chubb’s board had urged shareholders to vote against the proposal. It argued in the company’s proxy statement that ‘Chubb recognizes the existential threat of global warming and the necessity of moving away from global reliance on fossil fuels. Chubb announced its support for a global transition to a net-zero economy by 2050 and we have acknowledged our responsibility to take action to support and encourage this transition.’

The board wrote that the company is making ‘appropriate commitments on climate action’ including limiting certain underwriting activity. ‘But underwriting limitations must be balanced against the essential and core purpose of insurance, which society expects us to fulfill, to provide risk protection for lawful activity,’ it stated. ‘Any such limits on entire classes of activity interfere with this purpose and must be an exception based on analytical, fact-based examination of realistic alternatives.’

The board also argued that Chubb has made public disclosures about its steps to address climate change in its operations and product offerings, and in its underwriting and investment strategies, including issuing its first TCFD report in 2021.

‘Because the TCFD report includes information about how Chubb discloses, measures and reduces GHG emissions associated with its operations, and provides clear disclosure on how Chubb’s underwriting, investment and operations activities support the transition to a net-zero economy, the requested additional report would be duplicative of our existing TCFD report and a waste of corporate resources,’ the board wrote.


UNDERWRITING TARGETED
Meanwhile, another shareholder proposal on the topic of insurance activities and GHG did not gain majority support at Chubb’s AGM. The measure, filed by Green Century Capital Management, requested that the company’s board ‘adopt and disclose new policies to help ensure that its underwriting practices do not support new fossil fuel supplies, in alignment with the [International Energy Agency’s] Net Zero Emissions by 2050 Scenario.’ It was supported by 19.4 percent of votes cast at the meeting.

The board had also urged shareholders to vote against the proposal, citing some of the arguments used against the As You Sow measure. It also argued that the Green Century proposal ‘is requesting that Chubb adopt a policy banning underwriting for new fossil fuel exploration and development. Chubb agrees with the proponent’s concerns regarding climate change, but disagrees about how Chubb can or should address those concerns in the most practical and responsible way.

‘A blanket prohibition on supporting ‘new fossil fuel supplies’ would preclude Chubb from continuing to consider the complexities of an orderly transition and the reality that there are insufficient alternative energy sources to replace fossil fuels.’