15 November 2017
Swiss Re, Zurich, Axa and Scor are making the most effort to avoid underwriting the coal industry, according to a report by Unfriend Coal, a network of environmentalists which targets insurers.
The four firms are ranked highest in the lobby group's report Insuring Coal No More: An Insurance Scorecard on Coal and Climate Change, which rates 25 of the world’s largest re/insurers on their action on coal and climate change.
Firms are under pressure to disengage from the coal sector on both sides of the balance sheet. On the liability side, French insurer Axa was the first major firm to limit its coal underwriting, followed by Scor, which announced plans to limit its exposure in September.
Announcing the findings of the report at the Insurance & Climate Risk conference, Peter Bosshard, finance programme director of the NGO The Sunrise Project, said Zurich and Axa score highly for using a broad definition of coal companies that includes new and existing mines, and they are ending coverage of mining or electricity companies that derive more than 50% of their turnover from coal.
In addition, Swiss Re has already limited its underwriting of shale gas, tar sands and Arctic drilling projects and, as part of a broader carbon risk steering mechanism, is currently preparing a policy that will limit its business support for thermal coal utilities and mining. The new policy will enter into force in mid-2018.
Lloyd’s also told the authors of the report that it is “implementing a coal exclusion policy as part of its responsible investment strategy for the Central Fund”, which would enter into force in April 2018. In addition, Lloyd’s said it would draw attention to the issues of coal underwriting and divestment in the relevant market associations.
However, the Unfriend Coal coalition said insurers need to do more and called on firms to adopt a tighter 30% threshold and apply it to all types of insurance for all thermal coal. It also criticised US firms for not taking “meaningful action” to move away from coal.
Bosshard said: “Coal needs to become uninsurable. If insurers cease to cover the numerous natural, technical, commercial and political risks of coal projects, new coal mines and power plants cannot be built and existing operations will have to shut down.”
Insurers have also been ranked for their initiatives to promote climate solutions, for instance, though scientific research. Aviva, Allianz, Munich Re, Legal & General and Lloyd’s are among those that have shown climate leadership.
Unfriend Coal approached 25 insurers asking for details of their climate policies. The scoreboard is based on responses from 17 firms and information from an industry survey, company literature and websites from all the 25 firms.