A group of investment firms, conservationists and indigenous groups have called on some of the world’s biggest insurers to cease supporting oil and gas projects in the U.S. Arctic National Wildlife Refuge, even as the Trump administration advances plans to auction drilling rights in the Alaska wilderness.
The Gwich’in Steering Committee, a group representing indigenous tribes that live in Alaska and Canada and opposes efforts to drill in the refuge, coordinated the letter with investment firms, including Boston Common Asset Management LLC and Domini Impact Investments LLC, which collectively manage more than $47 billion of assets. Recipients of the letter, including American International Group Inc. and Allianz SE, are being asked to stop insuring or investing in oil and gas projects in the refuge. Officials from AIG and Allianz weren’t immediately available for comment.
The rugged and remote territory in northeast Alaska, which is home to polar bears, caribou herds, Arctic foxes and more than 200 species of birds, has become a focus of environmental activists and an embodiment of the vastly different climate policies of President Donald Trump and President-elect Joe Biden. While the Trump administration has set the stage for a possible sale of oil and gas leases in the refuge’s 1.56-million-acre (6,313 square kilometers) coastal plain before Biden’s Jan. 20 inauguration, Biden has promised to permanently protect the land.
The Alaskan wilderness also serves as a reminder of how proactive investors and pressure groups can force financial giants to change the way they operate. Most major U.S. banks have said they won’t finance oil drilling projects in the Arctic, after a similar pressure campaign. And the one major holdout, Bank of America Corp., was the target of a shareholder resolution filed this week by Trillium Asset Management asking how it will deal with the business risks of backing Arctic oil ventures.
“The environmental, social and governance factors linked with oil and gas development exposes your company to unnecessary reputational, legal and financial risk,” said the investor and conservation group. “Two-thirds of American voters oppose drilling in the Arctic refuge which is consistent with the long-held, popular, and bi-partisan support for permanent protection of the Arctic refuge.”
French insurer Axa SA has prohibited insurance of oil and gas exploration in the Arctic regions since 2018, and that includes the wildlife refuge in Alaska, said Sylvain Vanston, head of climate and environment for Axa Group in Paris. A two-year grace period for existing contracts to expire has now passed, he said.
The U.S. Geological Survey has estimated the Arctic refuge’s coastal plain may contain between 4.3 billion and 11.8 billion barrels of technically recoverable crude. It’s not clear what oil companies might pursue it, especially given the uncertainty they’d be able to secure essential permits from the Biden administration to mount drilling operations.
Biden has vowed to block oil exploration and said drilling in the refuge would be a “big disaster.” Yet his efforts to protect the territory could be complicated if the Trump administration goes ahead and sells the drilling rights since formally issued oil and gas leases on federal land are government contracts that can’t be easily yanked.
“The Trump administration’s plan to auction off our sacred lands in the Arctic refuge for oil drilling disrespects our human rights, ignores public opinion and denies the crisis of climate change,” said Bernadette Demientieff, executive director of the Gwich’in Steering Committee. “The banking industry already sent a loud, clear message to oil companies. Now it’s up to insurers to say ‘no’ to drilling.”
© 2020 Bloomberg L.P.