The race towards an exit from the coal sector among East Asia’s major powers is picking up speed. Responding to similar announcement from China and Japan, the Korean government committed to carbon neutrality by 2050 at the end of October. With a surprise announcement from Samsung, it seems Korean companies are now starting to extend this commitment to coal projects at home and overseas.
Around the world, 22 insurance companies adopted policies to end or limit insurance for coal projects in the past three years. Until now, Asian insurers have not joined this global trend. Japanese insurers Sompo, Tokio Marine and MS&AD announced in September that they would in principle stop insuring new coal projects. Their statements contained such large loopholes however that they did not appear to aim for practical impact.
One of the active coal insurers in Asia has traditionally been Samsung Fire & Marine (SFMI), the property & casualty insurer of the Samsung conglomerate. Other Samsung companies have been involved in the construction and financing of coal projects as well. Greenpeace Korea and the Korea Sustainability Investment Forum (KOSIF) recently published a report which found that Samsung Life and Samsung Fire & Marine were the biggest coal financiers in Korea, ploughing a combined $12.6 billion into 40 coal fired power stations in the past 12 years.
Since August, a network of groups including Solutions For Our Climate, the Asian Peoples’ Movement on Debt and Development and Market Forces has put pressure on Samsung not to build, finance and insure the Vung Ang 2 coal power project in Vietnam under the motto, Wrong Call on Climate.
After Samsung Construction & Trading and other Korean companies announced that they would go forward with Vung Ang 2 and pull out of the coal sector later, pressure on Samsung increased. The Natural Resources Defense Council is currently running a petition through which more than 30,000 signatories have so far told Samsung that they would boycott the company’s products until it stopped financing and insuring coal projects. The Korea Federation for Environmental Movements started its own petition in Korea in cooperation with the Insure Our Future campaign earlier this week.
Today, Samsung responded to the pressure by announcing that Samsung Life and Samsung Fire & Marine would divest from coal, and that SFMI would stop insuring new coal projects. “We decided to strengthen our coal phase-out policies in order to strengthen our environmental and social responsibilities. Through active engagement with stakeholders, we will pursue sustainable growth”, an unnamed Samsung official commented.
Many details of the new policy still need to be confirmed. Will Samsung stop insuring new coal projects including Vung Ang 2 without any exceptions? Will the company phase out insurance cover for existing coal projects as well? Will its divestment policy follow the thorough criteria of the Global Coal Exit List?
Assuming the new policy doesn’t include loopholes, Samsung Fire & Marine is the first Asian insurer – and the 23rd insurance company globally – to end insuring at least new coal projects.
"We welcome Samsung’s decision to move away from coal and expect this not to be the end of Samsung’s climate commitments. Samsung contribution to the climate crisis is still large, with many of Samsung’s affiliates still involved in the financing of operating coal power plants either through bond subscription or insurance underwriting. Samsung Heavy Industries is a leader in the global oil and gas industry as well. We hope Samsung’s step forward today leads to greater climate ambition.”
"We welcome the nation’s biggest two insurance companies’ decision to end coal financing. We are now calling on other Korean and Asian financial institutions to follow suit. While the policy is a major step forward, the devil is in the detail. What remains to be seen is how they implement the decision and close loopholes, namely with ongoing projects. The two insurers are involved in seven new coal projects in Korea alone. Also, as Samsung believes moving away from coal is the right direction, its non-financial affiliates should do the same. For example, Samsung C&T should withdraw from the proposed Vung Ang 2 coal project in Vietnam.”
"Samsung’s rapid response to the ongoing campaign shows that insuring coal is a losing battle. Other major coal insurers such as Lloyd’s of London, Tokio Marine, Ping An, Liberty Mutual and AIG need to stop underwriting the coal industry as well.”
