Resolved: That Fairfax disclose its financed emissions, across all material scopes, in absolute terms, as a first step towards a climate risk assessment of its holdings and operations.
Supporting Statement:
Over 500 institutions representing 40% of global financial assets have committed to net-zero targets and to establishing associated transition plans, recognizing the long-term financial risks and opportunities associated with climate change.
Fairfax states that “understanding climate change is not only critical to managing risks at a Fairfax level but also the opportunities arising from them,” and claims that climate-related risks are explicitly recognized as a senior management priority.
Yet, Fairfax has not made a net zero commitment, nor disclosed a transition plan. It has not even disclosed its financed emissions to its shareholders – the first step in assessing climate risk. An analysis of its subsidiaries and major investments reveals little climate progress among those companies.
Fairfax’s financing of fossil fuels is substantial. In 2023, Fairfax held C$1.5 billion in fossil fuel-related investments in its 13F holdings, and was the fifth largest global insurer of commercial fossil fuel clients, insuring approximately C$959 million.
In 2023 Fairfax derived 85% of its revenue from insurance activities. Insurance is on the front lines of climate impacts, with Fairfax incurring $587 million in catastrophe losses in Q3 2024 alone. Global economic losses from natural catastrophes reached USD$280 billion in 2023, with USD$108 billion of this in insured losses. Projections from Swiss Re suggest that insured losses could double within the next decade.
While climate change poses a material risk, at the same time, the energy transition presents significant opportunities. The International Energy Agency projects that USD 4 trillion annually will need to be invested in clean energy by 2030 to achieve net-zero goals.
Several global insurers have disclosed plans to actively reduce their exposure to fossil fuel assets and increase their investments in the transition. Allianz excludes new oil and gas projects from both its investment and insurance portfolios, while other major insurers including Zurich, Munich Re, Suncorp, Generali, and more have committed to end or restrict underwriting for new oil and gas projects. Aviva has committed to invest £2.5bn in low-carbon and renewable energy infrastructure and deliver £1bn of carbon transition financing by 2025.
While Fairfax itself acknowledges its exposure to climate risk and the potential opportunities resulting from the transition, shareholders are unclear whether and how the company’s acknowledgement is translating into specific actions.
Shareholders therefore request that Fairfax measure and disclose its financed emissions, across all material scopes, as a first step to identifying its climate risk.
- WRI, Financial Institutions Net Zero Tracker (n.d.).
- Fairfax, 2023 ESG Report (n.d.) at 13.
- Investors for Paris Compliance, Fairfax: An Assessment of Climate Risks (Jan, 2024).
- Investors for Paris Compliance, Playing with Fire (July, 2024).
- Insure our Future, 2024 Scorecard (Dec, 2024) at 27.
- Fairfax Financial, Financial Results for the Third Quarter (Oct, 2024).
- Swiss Re, Global economic losses from natural catastrophes (May, 2024).
- Ibid
- IEA, Net Zero Roadmap (Sep, 2023).
- Allianz, Statement on oil and gas business models (February, 2023).
- InsuranceBusiness, Zurich Insurance cancels underwriting new fossil fuel projects (April, 2024).
- Munich RE, New Oil & Gas investment / underwriting guidelines (October, 2022).
- Suncorp, Responsible underwriting, lending and investing (n.d.).
- Generali, Strategy on Climate Change (June, 2022).
- Insure our Future, Insurance Company Fossil Fuel Underwriting Policy Overview (July, 2024).
- Aviva, Aviva becomes the first major insurer worldwide to target Net Zero carbon by 2040 (March, 2021).