Insurers take heat from shareholders over oil and gas coverage

Insurance coverage is emerging as battleground for sustainability advocates pushing for action on climate change, with a handful of shareholder resolutions this year getting a small but potentially meaningful level of support.

While big insurers in recent years have faced proxy voting campaigns around how they measure and disclose greenhouse gas emissions, a newer type of shareholder resolution seeks to get them to stop providing coverage for new oil and gas projects. The latter type surfaced last year in resolutions from asset manager Green Century at insurers The Hartford, Chubb and Travelers, with only a small minority of proxy votes in favor.

This year, that tactic isn't yielding better results, at least so far.

Significantly, the Securities and Exchange Commission granted Chubb’s request to nix Green Century’s proposal from its proxy ballot. Although a similar shareholder resolution was allowed last year, the 2023 version was killed largely because it “micromanages the company,” the SEC wrote in its March response to Chubb.

And last week, just under 9% of shares voted to approve a measure at The Hartford that would have established a deadline for the company to phase out new underwriting for fossil fuel projects. That approval rate was similar to the vote on a nearly identical resolution last year.

“Regardless of the vote outcome, Green Century will continue to press The Hartford to fully address its climate risk. Despite its existing exclusions and its net-zero by 2050 goal, we’d like to see The Hartford extend its underwriting exclusions to other dirty fossil fuels, including new oil and gas projects,” Green Century Funds president Leslie Samuelrich said in an announcement from the company. “Insurance companies have a critical role to play in steering us toward a low-carbon economy, but supporting new oil and gas wells, pipelines, and transportation infrastructure will likely lock us into carbon emissions that we simply can’t afford.”

A vote on that issue will take place at Travelers’ meeting Wednesday.

The fossil-fuel phaseout shareholder proposals are different from others that insurers have faced — and continue to face — on disclosing how they will address climate-related risks. The disclosure-themed resolutions have received much higher levels of support in proxy votes.

At Chubb’s meeting last week, 30% of voters supported a resolution from As You Sow that asks the insurer to provide a course of action for its underwriting and investing in line with the company’s own greenhouse gas reduction goals.

A similar resolution earlier this month received just under 23% of shareholder support at Berkshire Hathaway.

“Twenty climate-related weather disasters a year, with losses exceeding $1 billion each, has become the new normal. Insurance companies in states most vulnerable to climate change are becoming insolvent,” As You Sow president Danielle Fugere said in an announcement from the group. “It is time for insurance companies to address the contradictions of enabling high carbon activities while paying for catastrophic losses.”

It has become common for financial services companies to set “net-zero” goals for their greenhouse gas emissions, and many have joined international alliances formed for just that point.

But activist shareholders are now essentially saying that talk is cheap — they want to see concrete plans for reaching ambitious climate goals.

In the current proxy season, new resolutions from As You So on that subject won significant, albeit minority, support at JPMorgan Chase (35%), Bank of America (29%), Goldman Sachs (30%) and Wells Fargo (31%).

Although the votes are nonbinding even if they receive majority support, public companies often take note of the results, which can be a barometer of what a growing proportion of shareholders might want in the future. That’s why shareholder proposals with support of 30% or less are often viewed as a success — such results are often enough to get companies to act.

In March, Chubb announced new criteria for underwriting oil and gas projects. The new standards, which fall short of what some shareholder groups and advocates had pushed for, require insured clients to cut down on their methane emissions. The new underwriting criteria also prohibit coverage for oil and gas extraction in government-protected conservation areas.

"Our policy on not insuring energy projects in protected areas also reflects our approach to setting clear guidelines to sustain biodiversity and protect nature," Chubb CEO Evan Greenberg said in an announcement at the time. "Taken together, our new underwriting criteria, along with our other substantive actions, are grounded in our commitment to lead the industry in the transition while balancing the need for energy security."