On February 8, 2022, five Environmental NGOs sent the request letter to 62 financial institutions which seem to be holding SOMPO’s stock.
Dear SOMPO Holdings Shareholders,
Request to engage with SOMPO to urge the company to stop underwriting fossil fuel projects
Japan Center for a Sustainable Environment and Society (JACSES)
Friends of the Earth Japan
As environmental NGOs, we have urged financial institutions to stop supporting new fossil fuels projects. To achieve long-term goals of the Paris Agreement, it is necessary to stop supporting not only new coal-fired power plants, but also new fossil fuel projects including oil and gas and to phase out support for existing fossil fuel production in line with a 1.5C pathway. Ending underwriting by insurance companies will play a vital role, in addition to stopping investment in fossil fuel projects by financial institutions.
We send this request letter to 62 financial institutions which seem to be holding SOMPO’s stock, as we would like to ask you to engage with SOMPO Holdings Co., Ltd. (hereinafter SOMPO), a major non-life insurance company in Japan, to urge it to withdraw from underwriting fossil fuel projects.
SOMPO, Tokio Marine and MS&AD announced in September 2020 that they will not underwrite or invest in new coal-fired power projects in principle. Although all three companies had set wide-ranged exceptions at first, MS&AD announced a policy in June 2021 to completely stop underwriting for coal-fired power projects planned in the future, and Tokio Marine announced a policy in September 2021 not to underwrite new insurance regardless of whether it is newly constructed or existing, while leaving CCS/CCUS and mixed combustion as exceptions. Meanwhile, SOMPO still has vague and broadly interpretable exceptions.
According to the report “Net Zero by 2050, A Roadmap for Global Energy Sector” released by International Energy Agency (IEA) in May last year, to reach net zero by 2050, no more new fossil fuels projects should be approved as of 2021, and the power generation sector needs to reach net zero GHG emissions globally by 2040. Therefore, it is necessary to stop underwriting not only for new coal mining and coal-fired power plants, but also for new oil and gas production, transport and power projects.
SOMPO, which still has some exceptions for underwriting coal-fired power generation and has no specific policy regarding underwriting and investment in other fossil-fuel-related projects, is not consistent with long-term goals of the Paris Agreement.
Insure Our Future campaign, an international network of environmental NGOs, released a ranking of the world’s largest insurance companies on their underwriting, divestment and climate actions for coal, oil and gas in November last year, with SOMPO ranked 21st out of 30, slightly behind Tokio Marine (16th) and MS&AD (17th). It has been pointed out that SOMPO has no restriction on investments in fossil fuels, that it has adopted a very vague policy on underwriting new coal projects, and that there has been no signs of divestments from fossil fuel industries.
On the other hand, European insurers such as Allianz, AXA and Axis Capital continue to dominate the top ranking from last year. In addition to ending cover for new and existing coal-related businesses, the top three companies have announced that they will extend the restrictions from the projects to the company level, and that companies deriving a certain percentage of their revenue or share of power generation from coal businesses will no longer be eligible for underwriting. In October 2021, AXA, the second insurer in the ranking, became the first major insurer that announced a comprehensive policy on oil and gas, stating that they will cease to underwrite new projects extracting oil for companies without a transition plan for conventional oil and gas, and will strengthen these restrictions on underwriting for unconventional oil and gas such as Arctic drillings, oil sands and shale gas projects from 2022 onwards.
We therefore request you to conduct engagements on the followings before the SOMPO’s annual general meeting of shareholders in June 2022.
- To remove exceptions from the underwriting policy regarding coal-fired power projects and commit to the complete cessation of underwriting.
- To end underwriting not only on coal-fired power projects, but also on new coal mining, tar sands, oil and gas projects.
- By referring to the Global Coal Exit List, to stop insurance underwriting as well as equity/bond investment for companies that are highly dependent on coal-fired power generation or companies planning to build new coal-fired power projects.
- By referring to the Global Oil and Gas Exit List, to stop insurance underwriting as well as equity and bond investment for companies that are planning new oil and gas projects.
Enclosed with this request, please find the 2021 Scorecard on Insurance, Fossil Fuels and Climate Change described above, released by the Insure Our Future campaign.
We would be grateful if you could send us your views and opinions on this request by March 8 to the following address.