Insurers with over $4trn (£3.05trn) in assets have announced a $20bn divestment from coal, with a growing number refusing to underwrite any new projects.
Insurance companies have pulled out $20bn of investments in coal and a significant number of them are considering to end underwriting for new coal projects, according to a new industry scorecard from the Unfriend Coal campaign.
In June 2017, the Unfriend Coal campaign has urged 25 largest direct insurers, life insurers and reinsurers, to take action on coal and also asked for their policies details. In the new scorecard, which rated the 25 insurers on their action on coal and climate change, 15 insurers have already divested approximately $20bn worth of bonds and equities in a bid to reduce their investment exposure to the coal industry, which is said to be the biggest single source of CO2 emission.
French insurance giant Axa was the world's first financial institution to divest from coal, removing hundreds of millions worth of coal investments in 2015 and became the first to announce it would no longer underwrite coal projects this year. In addition, the company has said that it is ending coverage to mining or electricity companies that derive more than 50% of their turnover from coal, and so has Zurich. Besides that, Swiss Re, Allianz and SCOR use a tighter 30% threshold, preventing them from investing in some of the world’s most aggressive coal developers, such as Korea’s KEPCO, Japan’s J-Power and Malaysia’s Tenaga.
So far, no American insurer has taken meaningful action on coal and climate change, and even industry giants such as Berkshire Hathaway, AIG and Liberty Mutual have remained completely silent about the catastrophic climate risks affecting their clients.
Insurers manage around $31 trillion of assets hence they have the power to shift money away from coal and towards clean energy, accelerating the change towards a low-carbon economy by blocking the funding for new coal mines.
Coal use may have peaked in China four years ago and could decline 15pc by 2040, the IEA said in its annual world energy outlook, while in India the share of coal in the electricity mix is likely to drop from three-quarters last year to less than half in 2040.