On June 29, 2022, PZU held its Annual General Meeting of Shareholders.
The event was accompanied by an activist protest with CARBON-FIT training, in which exercise equipment is replaced by lumps of coal. The happening was organized in cooperation with art activist Arek Pasożyt and Extinction Rebellion.
The general meeting itself was attended by our representative, who asked questions to the board about the climate policy of PZU – Poland's largest insurer.
PZU’s answers are commented on by Jan Chudzynski, a financial specialist at our foundation:
— The answers to questions posed at the PZU Group's Annual General Meeting on June 29, 2022 are surprising, and unfortunately in a negative way. Instead of setting the pace for the energy transition, PZU is declaring a "supportive approach," that is, continuing to insure high-carbon sectors.
According to PZU Group representatives, defining underwriting criteria and setting an end date for providing services to carbon-intensive sectors would be an "exclusionary approach" that does not take into account the social and economic aspect. What about the social and economic consequences of climate change? What about the responsibility of insurers to society?
What is also surprising is the part of the statement regarding Scope 3 emissions. Some companies in the Polish financial sector already report estimated Scope 3 emissions. Moreover, scope 3 is broader than the sources of emissions indicated in the answers to the questions (business travel and consumption of office supplies) and in the case of the financial sector, i.e. financed or insured emissions – when we are talking about the insurance sector, is responsible for emissions up to 700 times greater than those in scopes 1 and 2. —
Here are our questions asked at the AGM:
- The Board of Directors' Report on PZU and PZU SA Capital Group Activities for 2021 mentions the establishment of targets for achieving climate neutrality within the framework of its own activities (i.e., the so-called Scope 1 and 2).
However, there is a lack of information regarding Scope 3 emissions, i.e. those emissions related to PZU's core business - insurance. As many reports show, Scope 3 emissions are the main source of emissions for financial institutions, many times surpassing Scope 1 and 2 emissions.
Has there been any estimation of Scope 3 emissions in the PZU Group in 2021?
- The PZU Group Strategy for 2021-2024, announced in 2021, and also presented in the Board of Directors' report, reads: "We aim to make the activities of all insurance clients and investments climate-neutral by 2050."
How did this happen in 2021, and does it involve setting any criteria and restrictions against carbon-intensive sectors, including coal, as other insurance companies and reinsurers do in their climate policies?
- In the PZU Group Strategy for 2021 - 2024, announced in 2021, and also presented in the Board of Directors' report, you can read that "it is planned to conduct investment activities with respect for the principles of sustainable development."
Has it been defined what this means? Have restrictions been placed on investments in the coal or other carbon-intensive sectors?
And here is a transcription of the response of Dorota Macieja, director of PZU:
I wanted to respond to the questions of the first questioner and address the preamble that preceded those questions. PZU will meet the strategic goal of achieving net zero emissions. PZU's Climate Neutrality Roadmap, which has been prepared, is in line with the Polish government's plans, including the Polish Energy Policy to 2040, along with the social contract for the coal mining sector. Financial institutions, including insurers, can choose different solutions and paths in the energy transition process.
PZU chose a supportive rather than exclusionary approach, as it took into account its structure, regulatory regime, the specifics of the Polish economy, and the current energy mix.
The energy transition is a multi-year and complex process that requires both financial support and time. In cooperation with mining industry clients, we want to support the changes that are taking place in Poland's energy sector. PZU's approach to energy transition is comprehensive, which means that it also includes green investments and the pursuit of energy neutrality in its own business, as well as supporting and guiding its clients through the process. This support also applies to small and medium-sized enterprises, which do not always have the resources to participate in the transition. We believe that a strict exclusionary approach does not take into account the social and economic aspect, and these are equal ESG factors. It's hard to ignore the fact that we insure nearly 200,000 mine workers, that we implement a program with PGG [in English: Polish Mining Group] to improve work safety, that we organize health zones for KGHM.
Entities in ESG-sensitive industries deprived of adequate support, including from an insurer, will be forced to incur additional costs related to the pace of adjustment to changing emissions requirements. In the extreme case, they will be excluded from the market, which will directly affect the pace of economic growth, the energy transition process, and perhaps most importantly, the energy security of Polish citizens.
Moving on to questions, you asked whether we have counted our climate neutrality in the so-called Scope 3, because this information is not in our non-financial report.
Ladies and gentlemen, I don't know the company, and the vast majority of companies that report in Poland do not yet provide any values regarding the Scope 3.
What is this Scope 3? These are such indirect gas emissions that are generated, for example, during business travel, purchase of raw materials, paper, water, that are generated during the destruction of our produced waste. For the time being we have developed a methodology, we are in the process of hiring an external entity to verify that all our assumptions and calculations, all our methodology is appropriate. We still have time, also in the EU there are not yet such precise guidelines as to what should be reported in Scope 3.
The next question - you quoted the board's report "We aim to make all insurance customers' activities and investments climate-neutral in 2050 - how was this happening in 2021? Does this involve setting any criteria, restrictions, against high-emission sectors, including coal?
How do other insurance companies do it in their climate policies?
Yes, we have developed some criteria this year, as announced in the strategy until 2024, we will prepare, we are in the process of developing some methodology to evaluate the most important 55% of our most important corporate customers, we are advanced in the analysis methodology, also the whole value chain of our suppliers is carefully analyzed, and we are looking at, analyzing all suppliers for sensitivity to ESG factors.
Question 3: Yes, this year we adopted a sustainable investment policy, and on our behalf at the moment all investments we are interested in are being evaluated for ESG factors. Since we announced our strategy, we have been investing very heavily in renewable energy development. I will cite a few examples here:
First of all, we started our participation with investments in wind farms in Grajewo and Mława. Another point was the signing of a financing agreement for the Potęgowo wind power plant - currently the largest project of its kind in Poland. And in April this year, PZU signed a financing agreement for four new wind farms in Pruszcz, Markowice, Myszki. In addition to investing in key RES projects, PZU is also developing a green insurance offering - for both corporate and individual customers.
Already in 2021, PZU has introduced two new insurances for corporate customers - PZU Wind Energy and PZU Solar Energy. These are products that protect wind power plants and photovoltaic installations in case of failure, damage, destruction.
PZU Eko Energia is a product for individual customers and small and medium-sized businesses. It protects equipment that generates energy from renewable sources, and also protects owners of photovoltaic installations from the risk of interruption or reduced power generation activity. We are constantly interested in investing in green investments and are looking for such projects.
I feel that I have responded.
A rebroadcast of PZU's general meeting can be found at the following link:
Photo gallery of the event: