London Insurance Firms and the Pressure for Oil Divestment

This October, environmental activists from across the world have fixed their gaze upon the heart of London’s bustling financial district.

Protestors have occupied the offices of prominent insurers such as Allianz, Hiscox and Chubb, while also staging a dramatic "die-in" in front of the headquarters of Lloyd’s of London. But why are these firms the target of public ire and scrutiny?

The protestors say they want an end to the backing of the East African Crude Oil Pipeline (EACOP), a controversial project that has drawn criticism from environmentalists both locally and internationally for a number of years.

Activists say that the project cannot proceed without insurance, so they hope their actions will convince insurance leaders to withdraw their support.

Why is the EACOP project such a flashpoint?

The central subject of these protests is the much-contested EACOP project, a nearly 900-mile pipeline planned to transport crude oil from Uganda to Tanzania.

Nicholas Omonuk Okoit from the End Fossil Occupy Uganda activist group is one of the cause's leading local activists and he was present outside Hiscox's London office during the first demonstration.

He says: "We are going through injustice because of corporations – because of corporate neo-colonialism. European countries are profiting from African resources at the expense of people and the planet."

But why exactly is this project so controversial? The EACOP not only threatens diverse ecosystems, including protected areas and essential wetlands, but also endangered species within these ecosystems like elephants, lions and chimpanzees could see their habitats degraded.

Moreover, water resources, vital to millions who depend on the Lake Victoria basin, are at risk of contamination.

Massive CO₂ emissions are expected, worsening the global climate crisis by releasing an estimated 379 million tonnes of CO₂ over the pipeline's life span.

The human implications are also profound. More than 100,000 people could be displaced as a result of the project's construction, with reports of inadequate compensation and exacerbated poverty emerging already.

Political pressures have escalated in Uganda and Tanzania in recent times too, with critics of the EACOP facing intimidation and detainments. Since 2020, 47 campaigners have been detained in Uganda alone.

And then, there are the economic controversies.

Local campaigners like Nicholas highlight that foreign firms have secured the majority of contracts for the EACOP, too. Meaning that – even if the project were a sustainable endeavour – it would stand to deliver very few benefits to the local economies of Uganda and Tanzania.

The relentless pressure on insurers

This isn’t the first instance where insurance companies face public scrutiny for their roles in supporting the EACOP.

In fact, in March 2024, activists demonstrated at offices of other major insurers like Marine Talbot/AIG and Zurich, highlighting the pivotal role these financial institutions play in environmental degradation, especially the roles they were playing in the EACOP.

Ilana Winterstein from the 'Insure Our Futures' campaign says that "without insurance, fossil fuel projects can’t operate – and to highlight that insurers could be the unlikely heroes the world needs if they act now and stop insuring fossil fuel expansion".

This latest protest comes after Extinction Rebellion (XR) issued an ultimatum urging the UK’s leading insurers to abandon their fossil fuel clientele, particularly the EACOP project.

With no significant industry response before the 14-day deadline passed, activists have begun a renewed series of actions.

Does putting pressure on insurers change policy?

In short, yes.

The effectiveness of these protests is evident from a string of recent successes for the environmentalists.

For instance, Allianz scaled back its coal investments in the mid-2010s following similar protests. This triggered a gradual yet significant shift within the industry.

Just recently, after a blockade by Extinction Rebellion at Lloyd's, Probitas committed to withdraw from insuring both the EACOP and the West Cumbria coal mine projects.

Zurich Insurance has also responded to public pressure, committing to stop underwriting oil and gas projects as it looks to better align itself with the goal of achieving net zero emissions by 2050.

Sierra Signorelli, CEO of Commercial Insurance at Zurich, says that the company's new direction was representative of the "disconnect" between fossil fuel projects and the company's sustainable aims.

As the insurance sector grapples with its environmental responsibilities, the role of activism in shaping corporate policies has proven rather influential and there's a chance that these latest protests will have a similar effect.

Oliver Baete, the former CEO of Allianz, said after withdrawing its support for coal projects in 2015: "As a leading insurer and investor, we want to promote the transition to a climate-friendly economy."

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