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"Australian Ethical taking steps to increase interaction with QBE in regards to the underwriting of fossil fuels"

Insurer-related discussions with the super fund have failed to produce satisfactory outcomes.

"Australian Ethical takes its commitment to the environment a step further: intensifying their...
"Australian Ethical takes its commitment to the environment a step further: intensifying their dialogue with QBE regarding the underwriting of fossil fuels"

"Australian Ethical taking steps to increase interaction with QBE in regards to the underwriting of fossil fuels"

Australian Ethical Urges QBE to Limit Fossil Fuel Underwriting

In an unprecedented move, Australian Ethical, a leading ethical superannuation fund and investment manager, has taken its engagement with Australian insurer QBE into the public realm. This escalation follows years of private conversations and shareholder resolutions, as Australian Ethical seeks to pressure QBE to restrict its underwriting of fossil fuel expansion in line with science-based climate guidance.

The latest stewardship report from Australian Ethical vows to escalate engagement with QBE further in 2025. The fund questions whether the insurer's plan to increase premiums to protect the bottom line is a viable solution, given the natural ceiling to this approach. Australian Ethical's concerns about QBE's business model include unanswered questions over the effect of climate risk on future earnings.

The fund claims that QBE allows underwriting for new oil and gas projects without an assessment for Paris alignment. Approximately 50% of QBE's underwriting portfolio is in property and agriculture, sectors uniquely exposed to physical risk. Australian Ethical's call for QBE to limit its fossil fuel underwriting is not a new development, tracing back to 2016.

In 2019, the fund co-filed a shareholder resolution at QBE, which resulted in QBE announcing a coal exposure phase out. However, shareholders aren't getting access to the information needed about QBE's decisions regarding fossil fuel underwriting, according to Australian Ethical. The fund is calling on QBE to disclose how much of its current underwriting it expects to have to exit over the next three decades due to climate change.

Following QBE's 2025 annual general meeting, Australian Ethical escalated its engagement by voting against the re-election of QBE's directors, including its chair, on grounds of fossil fuel underwriting. In March this year, Australian Ethical wrote to QBE's board seeking clarifications over fossil fuel financing and was disappointed with the response.

The public outcry could step in where private conversations have fallen short, increasing pressure on QBE to do better. Climate-focused groups have been critical of insurers like QBE, highlighting that they should not support fossil fuel expansion beyond what scientific climate targets recommend. This ongoing pressure on QBE to tighten its underwriting stance is evident in the public criticism from these groups.

While some positive developments have been noted, QBE’s policies still appear under scrutiny regarding their exposure to fossil fuel underwriting and climate risk management. Australian Ethical continues to press for more stringent restrictions and greater transparency on this issue. The fund manages over $13bn and has been actively engaging with QBE throughout the fiscal year 2025 under their strategic stewardship initiative aimed at stopping unrestricted underwriting of fossil fuel projects.

In summary, QBE is under increasing pressure and engagement from Australian Ethical and other climate advocates to limit underwriting of fossil fuel projects aligned with science-based climate goals but has yet to fully commit to a full exclusion or strict limits. Australian Ethical maintains active stewardship engagement to drive this change.

  1. The ongoing public engagement by Australian Ethical and climate-focused groups highlights a demand for QBE's industry-leading environmental-science division to implement stricter finance policies regarding fossil fuel underwriting, ensuring compliance with science-based climate guidance.
  2. Given QBE's stated focus on finance and risk management, it is crucial for the insurer to provide detailed disclosures about the expected exit of its fossil fuel underwriting portfolio over the next three decades and how this aligns with its environmental and climate-change responsibilities.

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