Insurance firms urged to stop support for Brazil’s oil and gas exploration
Global insurance giants including MAPFRE, Chubb and AXA have been accused of fuelling Brazil's oil and gas expansions by insuring the national company accountable for nearly all of the nation's oil and gas.
New findings from the Insure Our Future NGO coalition has linked major insurance companies with the booming growth of Brazil’s offshore oil and gas drilling.
The coalition claims that companies such as Chubb, MAPFRE and Tokio Marine are the major insurers of Brazil’s national oil company Petrobras, which extracts nearly 93% of all Brazil’s oil and gas. Chubb and Tokio Marine, along with AXA, Liberty Mutual, Fairfax, Argo, and several Brazilian insurers, also insures exploratory oil and gas operations by international companies.
The United Nations has claimed that oil and gas production must decrease by 3-4% each year in order to help reach net-zero. However, the climate-skeptic Brazilian Government plans to expand oil production by up to 70% over the next decade.
The companies mentioned in the research provide insurance in the form of performance bonds that allow oil companies to meet national requirements to provide a minimum level of oil and gas exploration. These are tied to financial guarantees.
Insure our Future, and the NGOs it represents are calling on the insurers to move away from Petrobras and other oil and gas firms.
Commenting on the findings, Ilan Zugman, Latin America Director at 350.org, said: “It is completely absurd that international insurance companies like Chubb, MAPFRE, and Tokio Marine come to Brazil to support the fossil fuel industry extracting oil from some of the most sensitive regions of the planet.
“The expansion of the oil and gas sector, in addition to keeping Brazil from meeting its Paris Agreement goals, also has the potential to negatively impact the lives of millions of Brazilians already in vulnerable situations such as traditional fishermen, Quilombolas, and Indigenous Peoples. As a sad example, communities impacted by the largest oil spill in Brazil’s history, in 2019, have yet to receive proper compensation and still find remnants of oil in their territories.”
The 2019 oil spill in Northeast Brazil ended up covering more than 3,000km of beaches and mangroves. With Brazil heavily reliant on offshore oil reserves found in ecosystems like the Great Amazon Reef, Petrobras has now gained ownership on concessions located near the reef.
In the build-up to COP26, AXA unveiled a €1.5bn commitment to improving biodiversity and combat deforestation across key global hotspots. This includes €500m in reforestation projects in emerging countries, in a move that will help capture 25 megatonnes of CO2 emissions annually.
The company will also add extra scrutiny to investment and insurance across key markets that are drivers of deforestation. These include soy, palm oil, timber, and cattle production.
AXA was also named among the members of a new coalition of investors convened to promote a just low-carbon transition across Europe. Collectively, members represent €3.6trn of assets under management.
However, the company’s oil and gas policy does not rule out oil and gas expansion, which has angered Insure Our Future. The organisation claims this “leaves the door open” for AXA to support new oil fields in key biodiversity hot spots, such as the Potiguar Basin.
edie reached out to AXA, Chubb, MAPFRE, and Tokio Marine. Responding to this request, a MAPFRE spokesperson said: “As insurers, our environmental commitment is to steadily and progressively raise the demand for sustainability, accompanying society in a fair transition, and helping our clients and the people who depend on their activity to also converge in that direction in which we have no doubt that we should all go. That is what we have been doing in our insurance activity related to the different sources of energy based on coal.
“Economic decarbonisation is essential for the planet, but also for the people who depend on the current model, which is why our commitment is to accompany and help our clients also in that need to move towards a more environmentally sustainable activity. In relation to Brazil, we can say that we are part of the insurance of one of the marine oil exploration and production platforms, and the rest of our exposure, fundamentally, is insurance related to maritime transport, but we cannot provide more specific information because we understand that this belongs to our client.”
edie will update the story if more responses come in.