Willis Towers Watson’s most recent Mining Risk Review notes an “increasing and worrying trend for insurers to withdraw from what they consider to be environmentally unfriendly industries such as coal”. It confirms similar findings by the broker for the power sector earlier this year.

"With politicians seen at best as being too slow to tackle the [climate] challenges”, the mining head of Munich Re states in the new report, “’vox populi’ is calling upon the financial industries to use their potency to leverage the decarbonization process. Bluntly said: no investment in coal - no insurance in coal. And the fact that insurers and reinsurers are covering both sides, the risk taking and investment side, makes us an obvious 'target'."

Warning voices from the mining industry confirm that the Unfriend Coal campaign is starting to bite. Peabody Energy, the world’s largest private coal company, cautioned in its 2019 annual report that “our financial assurance obligations may increase” and “surety bonds and letters of credit may not be available to us, particularly in light of some insurance companies' announced unwillingness to support fossil fuel companies”.

Meanwhile, the CEO of South African coal miner Exxaro Resources warned in a recent earnings call that “we are also experiencing higher insurance premiums in the renewal of our insurance policies and will be incurring increased costs resulting from the recently introduced carbon tax.”

Increasingly institutions and sports events are coming under pressure not to accept sponsorship from coal insurers and financiers. As we reported in this newsletter Extinction Rebellion rejected a design award sponsored by specialty insurer Beazley in May, and the All Blacks are getting under pressure for their relationship with AIG.

In a letter sent yesterday, 25 NGOs from 14 countries wrote to the President of the International Olympic Committee calling out the gold sponsorship of the Tokyo 2020 Olympics by coal banks and insurers Mizuho, SMBC and Tokio Marine. “Behind the high-tech veneer of the Tokyo 2020 Olympics, the Japanese government and Olympic sponsors like Mizuho, SMBC and Tokio Marine continue to promote dirty and outdated coal technology that is fueling the climate crisis”, the coordinator of the No Coal Japan campaign commented. 

The NGOs asked that going forward the IOC “should work with Olympics organizers and host national Olympic committees to only approve corporate sponsors which have taken aggressive action to combat the climate crisis”.

With Axis Capital, at least 17 insurance companies have by now adopted policies to end or limit insurance for coal projects and companies. A new web graphic by the Unfriend Coal campaign offers a useful overview of the different policies. The graphic summarizes the quality of the policies against four criteria and links to the original documents. A detailed analysis and ranking of the coal and climate policies of 30 leading insurers will be published by the campaign’s 2019 scorecard report on December 2 (see below).

A new report published by ShareAction on September 13 presents practical examples for how 14 global insurers navigate escalating climate risks and regulatory pressures for better disclosure across underwriting and investment portfolios. The measures described include group-wide fossil fuel policies, Paris-aligned investment strategies and the elevation of climate in company engagement. The examples are welcome but only the first steps for an industry which needs to become a vanguard of climate action.

AXA and Allianz have adopted strong divestment policies, excluding companies highly involved in the coal sector or developing new coal plants. But contrary to Zurich, Suncorp or Swiss Re, they fail to apply the same criteria on the other side of their business, insurance services.

AXA and Allianz are still prepared to provide some insurance services, including property & casualty coverage, to companies which are planning massive coal mining projects such as RWE and the Adani Group despite having divested from them. This is inconsistent.