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Climate and coal policies of leading global insurers – briefing papers

August 3, 2017

Leading insurers have started to put their climate rhetoric into action and to exit the coal sector. Even so Unfriend Coal, a coalition of climate activists, has found that five prominent European insurers – Allianz, Generali, Munich Re, Swiss Re and Zurich – continue to hold at least $361 million of assets in companies which are planning to develop 97,000 megawatts of new coal power plants. The insurers also continue to underwrite new coal power plants. Their strong involvement in the coal sector creates serious risks for the climate as well as for their own financial interests.

In a series of briefing papers the Unfriend Coal coalition examines the climate and coal policies of Allianz, Munich Re, Swiss Re and Zurich ahead of the insurers’ half-yearly media conferences in early August. Insurers have a particular responsibility to take climate action because they have been aware of climate risks for more than 40 years.

The briefing papers find that Allianz, Munich Re and Swiss Re, along with at least six other insurers, are in the process of divesting their assets from the coal sector. So far, only AXA has also stopped underwriting coal companies in which it no longer invests. Alone among insurers, AXA is also divesting third party assets which it manages from the coal sector.

Zurich and Generali are the world’s biggest multiline insurers which have so far not taken action on coal. Allianz, Munich Re and Swiss Re (along with France’s SCOR) continue to underwrite coal companies in which they no longer invest. Allianz also continues to manage large coal assets for third parties through its investment funds. AXA, Munich Re and SCOR have taken action on coal, but are using lose criteria which don’t capture some of the world’s largest coal developers.

According to research commissioned by the Unfriend Coal coalition, Allianz, Generali, Munich Re, Swiss Re and Zurich presently hold a total of at least $361 million in companies that are currently planning more than 97,000 megawatts in new coal power plant capacity in 20 countries, including China, India, Indonesia, Vietnam and Poland. If completed these projects would make it impossible for the world to achieve the goals of the Paris Agreement.

With $241 million in investments in coal companies with 82,600 megawatts in their pipeline, Allianz is by far the most active investor in the expansion of global coal capacity. Allianz has divested its own resources from the coal sector, but not the large amounts of third party assets which it manages through its funds.

Generali and Munich Re hold major investments in coal developers as well, while the bond holdings of Zurich in such companies is relatively low, and Swiss Re does not hold any bonds in coal companies with expansion plans. Zurich does hold major bonds in controversial coal companies such as Glencore, Duke Energy and BHP Billiton, and Swiss Re holds $110 million of bonds in tar sands operators which it would no longer insure, and in controversial pipelines associated with tar sands.

Due to relatively low losses from natural catastrophes, most insurers expect to post positive financial results for the first half year of 2017. Yet experts such as England’s Prudential Regulation Authority warn that liability claims against companies causing climate change may pose serious threats to insurance companies.

Peter Bosshard, the finance program director of the Sunrise Project and a coordinator of the Unfriend Coal coalition, comments: “The continued support of the insurance industry for coal undermines the goals of the Paris Agreement. Given the pending climate lawsuits, the insurers’ legal cover for the coal industry also creates serious financial risks. Insurers should exit the coal sector out of moral responsibility and self-interest.”

The Unfriend Coal coalition includes groups such as Friends of the Earth France, Greenpeace Switzerland, Re:Common (Italy), Urgewald (Germany) and the Sunrise Project (Australia), among others. The coalition is currently preparing a report ranking leading insurance companies on their climate and coal policies.

Supporting statements:

Regine Richter, Finance Campaigner with Urgewald, comments on Allianz and Munich Re as follows:

“Allianz set an example by divesting from coal in 2015. Today the company needs to divest the third-party assets it manages from coal, or they will undermine all other action Allianz is taking on climate.  The company also needs to stop insuring coal companies if it wants to remain a climate leader.”

“Munich Re took a first step in divesting from some coal companies in 2016 but needs to strengthen its criteria for divestment, stop underwriting coal companies and become more transparent if it wants to match the climate policies of its European peers.”

Katya Nikitenko, Finance Campaigner at Greenpeace Switzerland, comments on Swiss Re and Zurich as follows:

“Swiss Re, Zurich Insurance and their peers need to address inconsistencies between their investment and insurance arms and stop fueling climate change. They claim that climate change is the ‘mother of all risks’, and it’s time they show they are not part of the problem but part of the solution.”

 

Contacts for further information:

 

The briefing papers are available the links below.

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