Environmental activism heats up as energy policies shift

By Rebecca Delaney

May 9 - (The Insurer) – As policy changes begin to feed through from the ‘super-year’ of elections in 2024, the scope of environmental activism is evolving, with potential to impact a rising number of insurance classes.

The movement was previously characterised by peaceful strikes or other forms of protest that seldom turned violent.

This was at a time when government policies and multilateral agreements generally moved in the direction of trying to reduce the carbon footprint and promote net-zero.

“We noticed that we actually had a relatively peaceful year (in 2024) compared to the expectations of the insurance market from an SRCC perspective,” Srdjan Todorovic, head of political violence and hostile environment solutions at Allianz Commercial, told The Insurer.

“It usually takes six to 12 months for governments to stamp their authority and start making changes. Sometimes there's protests against the government specifically, sometimes it's a protest following a policy change.”

An Allianz report last month on political violence and civil unrest trends noted that amid high inflation, wealth inequality, food prices and climate anxieties, further post-election changes or policy changes by governments will continue to act as trigger factors for protests globally.

Most notably in climate and energy policy, President Donald Trump withdrew the U.S. from the Paris Agreement on the day of his inauguration with a call to “drill, baby, drill”.

“With many countries changing their net-zero promises and some companies announcing a shift back towards fossil fuels, environmental activism is being galvanised like never before, continuing a recent trend which saw incidents increase by around 120% between 2022 and 2023,” said the report.

POLICY TRIGGERS

Environmental activism can trigger policies under several classes of business depending on the severity of the event, which have evolved alongside the wider movement.

Todorovic noted that the movement started out peaceful, employing strikes or other forms of protest, but that as the cause evolved it moved into “acts of nuisance”, generally carried out by older and younger generations.

“It was a non-damage trigger, so often the insurance was not really triggered because we focus on physical damage,” said Todorovic. “That would have been the SRCC element if it ever turned violent, which it rarely did.”

The last 18 to 24 months have seen a ramp-up in militancy, with more targeted tactics deployed against companies or organisations perceived to be responsible for greenhouse gas emissions or exacerbating climate breakdown.

This new phase of disruption includes acts of sabotage or taking direct action against businesses. For example, in January the Shut The System group claimed responsibility for cutting off the internet to (re)insurers and brokers after severing fibre optic cables in the City of London.

“When you're talking about attempting to cut cables and targeting specific segments of industry, I would say it's moving into a potentially sabotage element,” said Todorovic.

“Then you go all the way to the extreme potential of, dare I say, terrorism, because, by definition in our wording, it’s motivated by political ideology trying to influence the government or coerce the population.”

As cited in the Allianz report, the most recent Edelman Trust Barometer found that net 40% of respondents see hostile activism as a viable means to drive change.

Such tactics include attacking people online (27%), intentionally spreading disinformation (25%), threatening or committing violence (23%), or damaging private or public property (23%).

The report noted that more than half (53%) of young adults aged 18 to 24 said they approve of hostile activism. This drops to 41% for ages 35 to 54, and 26% for ages 55 and above.

The report said that patterns of protests and violence over the last 10 years indicate that targets such as government buildings, transport infrastructure, retail premises and distribution centres for critical goods can be specific, but that businesses are often victims of their locality and footprint.

However, Todorvic noted that the net has been widened in terms of target companies and sectors, from governments and several high-profile fossil fuel majors to ancillary sectors and service providers, including the insurance industry.

“It's definitely more focused and there are more specific targets on these acts. The fact-finding and resources around this has broadened, so there is more information being shared,” he added.

The energy, agriculture and aviation sectors were highlighted as likely targets for continued action, owing to the lengthy process of reforming processes and practices industry-wide.

“On the finance side, a lot of these businesses wouldn't be able to run without finance and insurance. So there is also that focus on the insurance industry, but also the finance segment and banking will be impacted,” said Todorovic.

This escalation risk is likely to remain a challenge for the broader insurance market as SRCC coverage goes beyond the PVT class of business, with businesses advised to review their coverage, particularly those with multi-country exposures.

“It is here to stay, that's clear for me. It would still be covered by either property policies, depending on that kind of act, or sometimes political violence as a difference in liability, or specifically around political violence,” Todorovic concluded.

“We've covered this historically anyway when we've had environmental protests against pipelines years and years ago. So as an insurance industry this is not new, but the scale of it is really opening new horizons and potentially new targets.”