According to the report by Investors for Paris Compliance, among the top 30 insurers globally, Fairfax Financial is ranked in the bottom 10 for underwriting insurance policies for fossil fuel companies that have not published climate goals.Nathan Denette/The Canadian Press
A shareholder advocacy group is accusing Canadian insurer Fairfax Financial Holdings Ltd. of being one of the worst offenders globally on climate action, contrasting with industry peers that have announced strategies to reduce greenhouse-gas emissions.
Investors for Paris Compliance (I4PC), an advocacy group that seeks to hold companies to account on climate action, said in a report released Thursday that Fairfax Financial FFH-T, a holding company, has not disclosed any net-zero targets, and it has no interim goals on climate.
With more than US$77-billion in assets, Toronto-based Fairfax is one of the world’s largest property and casualty (P&C) insurers, with more than two dozen subsidiaries across North America, Europe, Asia and Latin America.
According to the report, among the top 30 insurers globally, Fairfax is ranked in the bottom 10 for underwriting insurance policies for fossil fuel companies that have not published climate goals, as well as the fifth largest underwriter of fossil fuels in the world with about US$700 million in direct underwritten premiums for commercial clients in 2023
There are 650 global financial institutions, representing 40 per cent of assets worldwide, that have made commitments to net-zero goals, which typically include pledges to restrict certain fossil fuel underwriting or investing, or commitments to invest in climate solutions.
“We’re seeing insurers across the globe have net zero commitments, and also more robust transition plans, because when catastrophe hits, it’s hitting the insurers’ bottom line,” said I4PC senior policy analyst, Kiera Taylor, in an interview.
Fairfax did not respond to I4PC prior to publication of the report, or to The Globe and Mail’s request for comment.
In recent years, the P&C insurance industry has seen insured losses skyrocket globally, as back-to-back annual natural catastrophes have driven companies to pay out more than $100-billion in damages around the world. In Canada, insured losses related to severe weather exceeded more than $7.7-billion in the first nine months of 2024 – more than double the amount insurers paid out in all of 2023.
Insurers have reacted in part by passing down costs to policyholders in the form of higher premiums. The industry has also become more active in conversations on climate adaptation, and has promoted ways that industries and communities can address weather changes.
However, in Thursday’s report, I4PC says that, despite rising reinsurance costs owing to climate change and the material impact of climate-related losses on equity markets, Fairfax is an “outlier” in the industry that has “no goal or plan to align its operations or investments with a net zero transition.”
As well, the report says the holding company has not made any commitments to underwriting or investing in climate solutions and has not committed to lobbying in support of net zero, nor does it disclose its lobbying activities related to climate policies.
In comparison, Canada’s largest property insurer, Intact Financial Corp. IFC-T, has committed to net zero by 2050 and set an interim goal of at least a 40-per-cent reduction in greenhouse-gas emissions intensity of 36 per cent of its investments portfolio by 2030, compared with a 2019 baseline.
I4PC says Fairfax also holds stakes in several fossil fuel companies that present “significant climate transition risk,” and accounts for fossil fuel investments of more than $1.5-billion. For example, Fairfax owns a 48-per cent stake in oil and gas company EXCO Resources, where it invested $587-million. It has also invested $444-million in Occidental Petroleum and $364-million in Mytilineos a Greece-based energy company.
The advocacy group is recommending Fairfax set an overall net-zero target, as well as appoint a chief sustainability officer with a mandate and budget to drive a company-wide climate strategy.
“Fairfax’s senior management has both the ability and responsibility to guide its subsidiaries on risk management, within which climate change is significantly overlooked,” I4PC wrote in the report.
Among Fairfax’s subsidiaries, Kuwait-based Gulf Insurance is the only operation to state a commitment to net-zero goals in 2022, although Ms. Taylor says Gulf Insurance’s most recent 2024 report no longer mentions it.
Other minor insurance subsidiaries have disclosed “some” climate related policy, but have not made net-zero commitments, says I4PC, including Fairfax Brazil, ThaiRe and Singapore Re.
Internationally, other insurance companies have begun to recognize the threat to their industry from their own high carbon activities and adopt voluntary measures to address this, Ms. Taylor said in an earlier insurance climate report published in July.
“Dozens of insurers have policies restricting or ending their underwriting or investing in coal and oil and gas. Meanwhile, five of the seven largest Canadian P&C insurers have set a goal to reach net zero emissions by 2050,” she added.
The July I4PC report was critical of the insurance industry, estimating that the top seven P&C companies in Canada and their parent companies invested more than $19.5-billion in fossil fuel assets in 2023.
At the time, the Insurance Bureau of Canada responded to the July report saying the I4PC claims “paint an inaccurate picture of the considerations related to climate change-related risk management.” The IBC added that the industry is “actively working” with federal and provincial regulators on requirements to disclose their emissions, climate risks and opportunities starting in fiscal year-end 2025, with larger companies reporting in fiscal year-end 2024.