Insurance Giant AXA Divests from Fossil Fuels, Increases Green Investments
One of the world’s biggest financial services companies is both dumping investments and ending insurance for controversial US oil pipelines, taking fossil fuel divestment to a new level.
Read the entire article at The Guardian.
AXA is also quadrupling its divestment from coal businesses and increasing its green investments fivefold by 2020. The moves were announced at the One Planet Summit in Paris, called by the French president, Emmanuel Macron, to accelerate the use of global finance in fighting climate change.
Most existing fossil fuel reserves cannot be burned without helping to cause dangerous climate change, and proponents of divestment argue this makes the most polluting fossil fuel companies bad investments on both financial and ethical grounds.
If the world’s governments fulfill the Paris climate change agreement by slashing carbon emissions, many coal, oil and gas reserves could become worthless, potentially wasting trillions of investors’ money. This risk of stranded assets is taken seriously at the highest level, including the Bank of England, World Bank and the G20’s financial stability board.
AXA has broken new ground by not only divesting from 25 tar sands companies but also from three major pipelines needed to deliver their oil to market and by ending the insurance it provides, a total of €700m. The company declined to name the pipelines but it is understood they are major pipelines in North America.
Tar sands in Canada contain a huge amount of oil but require a lot of energy to produce, making the fuel particularly polluting. Pipelines from Canada into the US, such as Keystone XL and Dakota Access have been the focus of high-profile protests, particularly at Standing Rock Native American reservation in North Dakota. The French bank BNP Paribas and ING in the Netherlands have both recently divested from tar sands.
On top of their heavy carbon emissions, tar sands pose other problems, said Thomas Buberl, the CEO of AXA: “They often present acute human rights issues, if you think about population displacement and also the local pollution they produce.” In November, the Keystone pipeline leaked more than 200,000 gallons of oil in South Dakota. “The pipelines will also be stranded assets at some point, so we don’t want to invest,” Buberl said.
Ellen Dorsey, executive director of the Wallace Global Fund, said AXA’s announcement showed large institutional investors are starting to move rapidly to get out of fossil fuel investments and into green investments. “The good news is that they will profit on both sides of ‘divest-invest’ from doing so,” she said.