World’s third-largest insurer to divest from oil sands and pipelines

Alberta’s oil sands companies. (Image from archives.)

AXA SA, the third-largest insurer in the world, announced today that it will divest about $822 million from the main oil sands producers and associated pipelines, and will stop further investments in these businesses. The move could affect companies such as TransCanada, Enbridge and Kinder Morgan.

In a media statement, the French giant said its decision is based on the fact that oil sands are an extremely carbon-intensive form of energy and a serious cause of environmental pollution.

AXA also said that even though a couple of years ago it decided to divest close to $587 million from the coal industry by targeting companies which derive over 50% of their revenues from coal, its executive team now wants to increase its divestment fivefold to reach $2.8 billion. The plan is to divest from companies which derive more than 30% of their revenues from coal, have a coal-based energy mix that exceeds 30%, actively build new coal plants, or produce more than 20 million tonnes of coal per year. It will also stop insuring any new coal construction projects.

“We are willing to make all efforts to help mitigate climate change. Unsustainable business will become un-investable and uninsurable business,” CEO Thomas Buberls said in the release. “We are proud to have taken these decisions and to have inspired other actors. Today, in the spirit of the Paris Agreement, we want to accelerate our commitment and confirm our leadership in the fight against global warming,” he added.

AXA is the fourth French financial group stepping up its green game this December. Yesterday, Natixis sent out a communiqué stating that it will no longer finance “oil extracted from tar sands or companies whose business primarily relies on exploiting oil extracted from tar sands.” Last week, Société Générale made a similar announcement, while Credit Agricole said it will exclude from its portfolio “the worst-performing and most dangerous hydrocarbons,” meaning all extra heavy oil projects “in particular, all oil sands projects.”

The quartet of companies also raised funding commitments for renewable energy projects.

In reaction to these announcements, Patrick Bonin, Climate and Energy Campaigner with Greenpeace Canada, said that AXA’s decision is “proof that the domino effect of divestment from tar sands and pipelines has gained critical momentum.”

According to Bonin, the World Bank’s decision to exit from upstream oil and gas sent “a damning vote of non-confidence rippling through the finance community.”

World Bank president Jim Yong Kim made such announcement at an international climate summit being hosted by French President Emmanuel Macron to mark the second anniversary of the signing of the United Nations Paris Agreement on Climate Change, in which countries committed to limit the rise in global average temperatures to less than 2 degrees C.