Thirteen international NGOs call on the insurance industry to stop insuring and to divest from coal. They will hold them publicly accountable for their response.
Climate Change: Call on Leading Insurance Companies to Act on Coal
June 9, 2017
Avoiding catastrophic climate change is the most important challenge of the 21st century. Accelerating the transition from coal and other fossil fuels to clean energy sources is one of the most effective ways to mitigate climate change.
The undersigned civil society organizations call on the insurance industry to support the transition from fossil fuels to clean energy through its underwriting and asset management activities. We welcome the initial movement of insurers away from underwriting and investing in fossil fuels, and invite you to join this process We will survey the position of major insurance companies in regard to fossil fuels and climate change in October 2017, and hope we can include your company as a leader rather than a laggard in this survey.
The case for action on fossil fuels
Burning coal contributes almost half of all CO2 emissions, and is the single most important factor causing climate change. Climate Analytics, a renowned science and policy institute, calculated in November 2016 that emissions from burning coal need to be reduced to close to zero by 2050 for the Paris Agreement to be implemented at the lowest possible cost. According to Climate Analytics this means that existing coal plants need to be retired early, and that no new coal plants can be built. The planet’s carbon budget, in other words, does not allow for any new coal projects.
As the Bank of England’s Prudential Regulatory Authority has warned in September 2015, climate change creates significant physical, transition and liability risks for insurers. We believe that being associated with climate destruction will also create reputational risks for insurance companies in the eyes of employees, customers, shareholders and other actors. More fundamentally, failing to implement the Paris Agreement would create climate chaos at a scale that risks making much of the industry’s current market uninsurable.
“The prospect of extreme climate change and its potentially devastating economic and social consequences are of great concern to the insurance industry”, 66 insurance CEOs noted in the Climate Risk Statement of the Geneva Association, which they signed in May 2014. “We are willing to play a major and concerted role in the global efforts to counter climate risk.”
Consistent with this need for urgent action, we believe it is time for leading insurance company CEOs to commit to the following actions.
Our call for action
We call on leading insurance company CEOs to commit to the following measures immediately, and by October 15 at the latest:
(1) Develop and adopt publicly available policies not to underwrite any new coal exploration, coal mining, coal power plant or coal infrastructure projects, and not to offer any insurance, including renewing existing policies, to companies that meet any one of the following criteria:
- They derive at least 30% of their revenues or power generation from coal;
- They produce, trade or consume at least 20 million tons of coal annually;
- They plan investments in new coal mines, power plants or infrastructure.
Workers compensation policies, which directly benefit workers in the coal industry, should be exempt from this policy.
(2) Publicly exclude offering any insurance coverage to the Adani group of companies and partner companies associated with the Carmichael coal mine in Australia, one of the world’s largest coal mining projects. The Carmichael project is of particular concern to the undersigned organizations due to the vast projected CO2 emissions associated with it, its impacts on the Great Barrier Reef, and its questionable economics.
(3) Develop and adopt a publicly available policy to divest, within six months, any assets from companies that meet any of the criteria listed above. They should divest such holdings from investments on their own accounts, and no longer offer respective holdings to external investors whose assets they manage.
(4) Beyond October 2017, develop a plan to divest from and cease underwriting other fossil fuel technologies (oil, gas and associated infrastructure) for their business to become fully compatible with the goals of the Paris Agreement.
(5) As they divest from coal and other fossil fuel projects, scale up investments in clean energy companies that follow international human rights, social and environmental standards in their projects at a corresponding pace.
By taking the actions outlined above, your company can become a leader in the global efforts to mitigate catastrophic climate change. The undersigned organizations will be happy to engage in a conversation on the topic with you. We will closely monitor the role of insurance companies in the transition from fossil fuels to clean energy sources, and look forward to sharing this information with the wider public.
We invite you to inform us about your response to our call to action before October 15, 2017. Our contact person for correspondence is Dr. Peter Bosshard, Director, Finance Program, The Sunrise Project, [email protected]. From June 13, more information about the new campaign to expose climate leaders and laggards in the insurance sector can be found at www.unfriendcoal.com.
Thank you for your interest. We look forward to your soonest reply.
Brett Fleishman, Senior Global Analyst, 350.org
Nell Greenberg, Campaign Director, AVAAZ
Vanessa L. Green, Campaign Director, Divest Invest Individual
Lucie Pinson, Private Finance Campaigner, Friends of the Earth France
Markus Allemann, Co-Executive Director, Greenpeace Switzerland
Julien Vincent, Executive Director, Market Forces
Patrick McCully, Climate & Energy Program Director, Rainforest Action Network
Antonio Tricarico, Programme Director, Re:Common
Catherine Howarth, Executive Director, ShareAction
Nicole Ghio, Senior International Campaign Representative, Sierra Club
John Hepburn, Executive Director, The Sunrise Project
Heffa Schücking, Executive Director, Urgewald
Donna Lisenby, Clean & Safe Energy Campaign Manager, Waterkeeper Alliance