An increasing number of insurance companies divest from fossil fuels
Nov 15, 2017
According to a new report, approximately $20 billion of assets around the world have shifted away from coal operations due to concerns over climate risks.
The “Insuring Coal No More: an Insurance Scorecard on Coal and Climate Change” report was published by Unfriend Coal network, a global coalition of NGO’s and social movements advocating against coal including 350.org, Greenpeace, Sierra Club and Market Forces.
As insurance companies play a pivotal role in sustaining the whole coal supply chain- from the mine construction to the power plant operation, it means that without the coverage of their significant natural, commercial, legal and political risks, major coal mines, ports and power plants could not be funded, built or operated.
The report says that an increasing number of insurance companies have divested from providing insurance coverage and investment funds to new coal projects, they are selling holdings in coal companies and refuse to underwrite their operations.
Among the reviewed companies, fifteen of them have fully or partially halted financial relations with coal companies, representing $4 trillion in global assets.
The first-movers, including Allianz, Aviva, AXA and SCOR, are almost exclusively located in Europe and represent 13 percent of all global insurance assets, and none of the major US insurers, such as Berkshire Hathaway, AIG and Liberty Mutual have announced similar plans.
Peter Bosshard, the coordinator of Unfriend Coal, said The Guardian: “Coal needs to become uninsurable”.
“If insurers cease to cover the numerous natural, technical, commercial and political risks of coal projects, then new coal mines and power plants cannot be built and existing operations will have to be shut down”.
On Monday, Zurich insurance Group launched its new climate risks strategy, where it incorporated Environment, Sustainability, Governance (ESGs) criteria to the coal sector.
It urged other insurance companies to facilitate the transition to a cleaner energy future by reflecting the climate-related risks inherent in thermal coal in their underwriting and investment policies.
The company announced that it will stop providing insurance or risk management services for new thermal coal mines or for potential new clients that derive more than half their revenue from mining thermal coal.
It will also stop supporting utility companies that generate more than 50 percent of their electricity from coal.
According to Unfriend Coal, Swiss Re and Lloyd’s are announcing plans to divest from coal in the coming months.
You can access the full underwriting Scorecard report here.