Activists have accused insurers of diluting the industry’s first attempt to quantify the climate impact of their underwriting books.

Insurance and reinsurance play a crucial role in the energy sector, but companies that provide coverage for oil fields and mines have provided scant details about the emissions for which they are responsible.

France’s Axa and Germany’s Allianz are among insurers preparing to assess the carbon footprint of their underwriting business after the Partnership for Carbon Accounting Financials published standards for the industry in November.

Campaigners, however, say the industry group’s new standard allows insurers to omit the bulk of the emissions associated with underwriting portfolios: so-called Scope 3 emissions made up of greenhouse gases emitted not by companies themselves but along their supply chains and by them. who use their products.

Including these emissions, which would account for the majority of the average company’s carbon footprint, is currently a recommendation but not a requirement of the PCAF standards.

In its current form, the accounting standard “opens the door” for companies to “hide” their exposure to fossil fuels and is “clearly not in line” with the advice of UN bodies, said Peter Bosshard, director of the financial program of the Sunrise Project. , a network of climate activists.

Privately, insurance executives say adding indirect emissions would increase the likelihood of “double counting.” People close to PCAF noted that it requires insurers to explain their reason for not including scope 3 emissions, if they choose not to.

Renaud Guidée, group risk director at Axa, one of PCAF’s 18 insurance members, told the Financial Times that the accounting standard heralds a “step change in non-financial reporting,” which insurers will use to “direct the customer behavior at net zero.

Guidée said that scope 3 data was not yet of a high enough quality to make its disclosure mandatory: “We need to make sure that we not only have data available but also reliable data.”

Another potentially damaging omission, campaigners say, is that construction risk coverage, without which new fossil fuel projects cannot be built, is not included in the PCAF guidelines. Data on the emissions generated by construction projects over their lifetimes “most of the time are not available,” PCAF said.

More broadly, the same campaigners say insurers are skewing the weighting of issues in their favor, arguing that issues insured should be based on the value of the project insured. Currently they are calculated on the cost of coverage, as a proportion of the client’s total income.

Estimates from Swiss Re and Oxford Economics suggest that insurers disclosing their carbon footprint using the current method would take on average only about 0.5 percent of total customer emissions into their own carbon books.

The insurance sector’s footprint should be linked to the total value of insured assets, not just premiums, argued Julian Richardson, chief executive of sustainable insurance specialist Parhelion. “They could have been bolder and recognized the importance of insurance. . . so i believe it [the standard] He needs work,” he added.

The PCAF said its recommendation that scope 3 emissions should be disclosed went further than those of the Greenhouse Gas Protocol, the carbon accounting tool it uses.

Allianz said it is “committed to accelerating the transition to a decarbonised economy and supports its insurance clients in transitioning to climate-resilient business models in the coming years.”