Insurance company American International Group (AIG) has announced a target of making all underwriting and investment portfolios net zero by 2050. AIG unveiled this goal in a statement on its website, and also reaffirmed the aim of achieving net zero emissions from its own operations by 2050.
The company outlined a series of steps to help it meet these targets. It has committed to powering all operations with 100% renewable energy by 2030.
On the investment and underwriting side, the company will stop insuring or investing in new coal-fired power plants, oil sands, and arctic energy exploration projects.
“Leading change in a changing world requires being a company of action – and, as a market leader, AIG is committed to setting the standard with our actions. We believe today’s ESG commitments are an important step forward for AIG, the clients we serve and the global communities where we live and work. AIG is focused on the realities of climate change. The data about climate change is unambiguous and we believe that AIG can be a catalyst for positive change as it relates to sustainability advancements and renewable energy expansion,” said Peter Zaffino, Chairman & CEO of AIG.
The announcement comes after AIG appointed Constance Hunter as Executive Vice President, Global Head of Strategy & ESG last December. She oversees the firm’s own ESG commitments and liaises with companies insured by AIG to help guide them through the decarbonisation process.
“We are committed to a transparent journey toward sustainability advancement. We are having constructive discussions with all our stakeholders on this important issue and look forward to reporting progress. We will work together with our clients and distribution partners, in particular, to ensure an ongoing transition to a net zero future and provide guidance on feasible solutions designed to help manage climate-related risks,” Hunter said.
Insurance companies are not yet in the spotlight when it comes to the green transition. Carbon-intensive industries like shipping and power generation garner much more attention. But the launch of the UN-convened Net-Zero Insurance Alliance (NZIA) in July 2021 marked a change in tone from insurers.
Now, this group of 53 institutional investors is working towards common decarbonisation targets for 2025. Insurers are well-placed to accelerate the green transition across a range of sectors, working with major players from all industries.
Progress has already been made by insurers refusing to underwrite and finance new coal exploration. Industry experts anticipate that next steps will include divesting from existing coal projects and moving away from oil and gas.