Australian Ethical calls out QBE over climate risk concerns

Australian Ethical Investment has called on QBE Insurance Group to disclose the risk climate change presents to its ongoing business, and the justification for its policy that allows the continued unrestricted underwriting of new oil and gas projects until at least 2030.

As a major shareholder - owning $56 million worth of QBE shares as at 31 January 2025 - Australian Ethical said it was concerned that almost half of QBE's underwriting business is in property and agriculture and is therefore exposed to the physical risk of climate change.

As a shareholder, the investment manager said it is concerned that a significant portion of that business may be at risk of becoming uninsurable over the next three decades.

This follows QBE's 2024 reporting that it has already begun to exit property insurance exposures due to climate risk.

Australian Ethical said it is concerned that despite this, QBE's policy allows it to continue to underwrite new oil and gas projects without any restrictions, or assessment of Paris alignment.

"This is out of step with its industry peers and IEA analysis that states no new oil and gas should be developed to reach net-zero by 2050 and limit warming," Australian Ethical said.

"It is unclear whether QBE is assessing how this policy may be exacerbating physical climate risk over the long term and further threatening its ability to provide general and commercial insurance at the current scale."

Ethical stewardship lead at Australian Ethical Amanda Richman said the investment manager 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.

"Shareholders aren't getting access to the information we need and we're questioning whether board and management are making decisions in QBE's long-term interests," Richman said.

"While some may consider that raising premiums can help manage QBE's exposure to climate risk and protect margins temporarily, there is a natural ceiling."

Australian Ethical Investment added it has engaged with QBE about its climate commitments and policies with respect to its underwriting activities since 2016.

It added that it wrote to QBE in March asking the board to clarify its current approach to oil and gas underwriting and disclose its modelling but was "disappointed" to not receive definitive answers.