In an era of heightened environmental awareness, global insurer Chubb Ltd. has taken a bold step to address methane emissions, a pressing concern in the fight against climate change. Methane, a potent greenhouse gas, is 85 times more effective at trapping heat than carbon dioxide over two decades and contributes approximately 30% to the global temperature increase observed since industrialization.
As a top-10 insurer worldwide for oil and gas producers, Chubb has moved beyond conventional underwriting practices and introduced stricter requirements for their clients in this sector. Chubb is demanding that oil and gas producers implement measures to reduce methane emissions, or they will be denied coverage. The company will also cease underwriting projects in areas designated as protected by state, provincial, or national governments.
Chubb’s CEO, Evan Greenberg, emphasizes that this move is not motivated by activist pressure but is a “science-based and technical way” to contribute to carbon reduction efforts. Chubb positions themselves as a partner with clients throughout this transition by providing verification of necessary steps taken towards reduced emissions. If clients fail to meet these requirements, then Chubb denies underwriting services.
This approach aims to balance the need for energy security while promoting responsible practices within the oil and gas industry. Many of Chubb’s clients already have technology in place to reduce methane emissions, while others have been granted a grace period to develop a viable plan. This collaborative effort may serve as an example for competitors within the insurance realm who face increasing criticism from environmentalists seeking outright refusal of coverage for fossil fuel companies.
As part of these new policies, Chubb requires clients to develop “evidence-based plans” for managing methane emissions. As a minimum, clients must have programs that detect and eliminate leaks and regulate nonemergency venting. Furthermore, they need to adopt one or more proven technologies that reduce emissions resulting from flaring.
Chubb’s proactive approach represents a unique alternative to the traditional elimination of coverage often demanded by environmental activists. By promoting corporate accountability and supporting the responsible reduction of emissions, Chubb is empowering oil and gas producers to become more eco-friendly while addressing the urgent need for climate change mitigation.
Chubb’s new requirements rest on evidence. Clients must provide evidence-based plans for managing methane emissions. At Project Canary, we believe data should be at the heart of all sustainability programs. Relying on auditable, granular emissions and climate data will help us all build the trust to fuel the energy transition by using transparency and transactability as a reliable backbone for stakeholders.