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QBE’s unanswered questions

11 June 2019

11 June 2019

It’s not often that an annual general meeting (AGM) can be described as compelling. QBE’s AGM held on 9 May, however, delivered the goods with several questions from the floor resulting in extraordinary exchanges between shareholders and the chairman Marty Becker and CEO Pat Regan.

Unfortunately, these questions, relating to QBE’s response to the climate crisis and inconsistencies within QBE’s Energy Policy, remain unanswered.

These questions are relevant not just for QBE, but for the entire insurance industry, which is currently grappling with the existential threat that global warming poses. As floods, bushfires and storms get more frequent and intense, claims and premiums are increasing and more people are finding insurance unaffordable. Unless this pattern can be turned around, regulators may soon start to intervene.

The Insurance Council of Australia (ICA) was quick off the blocks in late May calling on the re-elected Morisson Government to fund measures to increase protection from natural disasters in high-risk areas. The body that represents Australia’s big three insurance companies, QBE, IAG and Suncorp, wants taxpayer funds to be spent on flood levees and other protective infrastructure and called on the government to “tackle climate change”. It is unlikely however, that these calls will be taken seriously while all three insurers continue to be complicit in the expansion of fossil fuels through investments and/or underwriting. It is obviously hypocritical for the ICA to be calling for action on the climate crisis while its members’ activities make the problem worse.

In light of this, on the 29th of March QBE released an Energy Policy which saw it commit to ending its direct investments in thermal coal and its underwriting of new thermal coal projects from 1 July 2019. It also flagged that it will be phasing out its entire thermal coal business by 1 January 2030. This makes it the first insurer based outside Europe to take action to reduce its coal exposure.

This same Energy Policy also committed QBE to continuing its investments in and underwriting of other fossil fuels, namely tar sands, oil and gas. It was this contradictory approach that prompted bushfire survivors, a Great Barrier Reef dive instructor and a businessman whose property was damaged in Cyclone Debbie to come to the AGM, tell their stories and ask some tough questions of QBE’s leadership.

It is worth noting the questions in full:

Question 1

I’m Janet Reynolds and I come from Nambugga, which is on the far south coast of NSW. Last winter a massive bushfire carried on winds of 130km/h swept through my property, destroying everything.  I managed to drive out through the flames and stopped briefly to pick up a tree off the road and throw it down the bank. I was lucky to get out with my life.

Recently, commendably, QBE took a great step in committing to phase out its thermal coal business due to the thermal coal industry’s contribution to global warming. So why is QBE still insuring tar sands and unconventional gas, when the climate-wrecking carbon emissions from these industries are around the same as thermal coal? Is QBE comfortable supporting these industries even though they will fuel more bushfires like the one that destroyed my home?

Question 2

My name is Tony Fontes and I’m from Airlie Beach, Queensland where for the last 40 years I’ve lived the dream. I’m one of those lucky people that calls the Great Barrier Reef my home, and my work is diving and it has been a dream. However, over the past few years that dream is fast becoming a nightmare for that very reason of climate change. Many of the dive sites, my favourite dive sites, cornucopias of life, have become wastelands. Now most of you have probably read about the impacts of climate change on coral reefs, things like coral bleaching, ocean acidification, etc, but as a diver I see that every day. I see the bleaching, I smell the bleaching, I touch the bleaching. And let me tell you it’s soul-wrenching, brings tears to my eyes just thinking about it. And it’s brought me down to Sydney and I have a very important question I’d like to ask.

The Intergovernmental Panel on Climate Change’s 1.5 degrees report released last October showed that if we limit global warming to 1.5 degrees then 10-30% of the world’s coral reefs are likely to survive. If we let warming get to 2 degrees then it’s likely that over 99% of coral reefs will die out.

The same report outlined scenarios for how to limit warming to 1.5 degrees and the only scenarios that included increases in oil and gas consumption assumed widespread use of carbon capture and storage – a technology that isn’t viable and that QBE, in its energy policy has recognised as not being viable. So why is QBE prepared to help the oil and gas industries expand through investments and underwriting?

Question 3

I’m a resident of the town of Tathra in far south NSW, and only 18 months ago I stood on a riverbank for about six hours and watched the homes of my neighbours and friends burned to the ground. Sixty-nine families who lost not just their homes but everything in them, and to date only three of those families are back in their homes. I come from a community that is deeply, deeply touched by climate change so I ask your tolerance again to hear another question about the climate because to us from Tathra this is now urgent. We’ve felt it, we’ve stood in the heat, we’ve smelt the smoke and we’ve lost everything.

So my question to you: In QBE’s new Energy Policy, our company justifies continuing to support the expansion of natural gas use by describing it as a “transitional fuel”. I’m confused by this. When the gas industry first came up with the “transitional fuel” line, renewable energy was more expensive than gas, so a case could be made for replacing coal with gas until wind and solar power were more affordable.

However, in Australia and many other countries around the world wind and solar power have been cheaper than gas-fired power for a number of years now. According to a Bloomberg report in December, renewable energy is now cheaper than existing gas too, and is cheaper than existing coal in NSW and Qld.

So how exactly is gas a “transitional fuel” when it makes both climate and economic sense to replace coal with cheaper renewables?

QBE’s Chairman and CEO refused to answer these questions, only committing to looking at its existing policies and updating them in the near future. QBE chairman Marty Becker insisted this policy was a “living document” that “may change tomorrow” and that “you will see more from us [on global warming] in the future”.

Leaving the door open to changing a brand new energy policy is an admission that QBE has not gone far enough in reducing its exposure to fossil fuels. The grilling it faced at its AGM should be seen as a lesson by other insurance companies contemplating a piecemeal approach to dealing with climate risk. A holistic approach that puts a date on phasing out support for all fossil fuels is the only way not just to avoid AGM questions, but also to tackle the climate crisis.

Contact QBE and ask it to end its support for tar sands, oil and gas projects by filling out the form below.