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On Insurance, Coal and Climate Change

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On Insurance, Coal and Climate Change The 2018 Scorecard on Insurance, Coal and Climate Change December 2018 Sunrise_Scorecard_US__Nov2018.indd 1 11/26/18 2:48 PM INSURING COAL NO MORE The 2018 Scorecard on Insurance, Coal and Climate Change Published by 350.org, Center for International Environmental Law (USA), ClientEarth (UK), Consumer Watchdog (USA), Foundation “Development YES - Open-Pit Mines NO” (Poland), Ecologistas en Acción (Spain), Friends of the Earth France, Greenpeace, Indigenous Environmental Network, Market Forces (Australia), Rainforest Action Network (USA), Re:Common (Italy), Sunrise Project (Australia), Urgewald (Germany), Waterkeeper Alliance (USA) Coordination: Casey Harrell Research: Kanchan Mishra, Profundo Author: Peter Bosshard Design: Design Action Collective Photocredits: Greenpeace Australia Pacific (p. 1), Julia Kilpatrick/Pembina Institute (p. 2), Edouard Marchal (p. 8), Greg McNevin/ Europe Beyond Coal (p. 15), Unfriend Coal campaign (p. 19), Daniel Rosenthal/Greenpeace (p. 20) December 2018 This report and further information on coal insurance are available at https://unfriendcoal.com/ Currencies: $ refers to US dollars in this report. Disclaimer: The organizations listed as publishers endorse the contents of this report as a whole, but not every organization necessarily endorses every score for every company. 2 INSURING COAL NO MORE: 2018 Scorecard on Insurance, Coal and Climate Change Sunrise_Scorecard_US__Nov2018.indd 2 11/26/18 2:48 PM EXECUTIVE SUMMARY Our future wellbeing depends on a swift end to incompatible with the industry’s public positions the use of coal, the single biggest source of car- on climate change, and with its fundamental mis- bon emissions. The latest report from the UN’s sion to protect its customers from catastrophic Intergovernmental Panel on Climate Change adverse impacts. found that in order to limit global warming to Last year the Unfriend Coal campaign, in its 1.5°C we must phase out at least 59% of coal first Scorecard on Insurance, Coal and Climate power worldwide by 2030 and reduce it effec- Change, showed how the world’s biggest insur- tively to zero by 2050.1 ers are starting to pull out of coal. This year’s The IPCC calls for a “rapid and far-reaching scorecard finds that action has accelerated as transition” of unprecedented scale to a low-car- more companies have joined the trend and early bon economy.2 Yet, in the three years since the movers have strengthened their policies.5 Paris climate summit set the 1.5°C target, 92 GW of new coal power has been built worldwide. A further 1,380 new coal-fired power plants with a combined capacity of 672 GW are cur- “A 2°C World rently under construction or in the pipeline.3 Completion of these projects would make it Might Be impossible to avoid climate collapse. Insurance companies are in a unique position to Insurable, A 4°C accelerate and scale up the required transition to a low-carbon economy. As risk managers they World Certainly play a silent but essential role in deciding which types of project can be built and operated in a Would Not Be” modern society. Without their insurance, almost no new coal projects can be financed and built, (Henri de Castries, former and existing facilities will have to find new ways Chairman and CEO, AXA, 2015) of managing their risks or close. If a project is not insurable, it’s not bankable. Insurers are huge investors with approximately Insuring Coal No More analyzes the evolving $31 trillion of assets under management, and role of the global insurance industry in the coal hundreds of billions of dollars invested in the sector and the transition to a low-carbon econ- fossil fuel sector.4 Their decisions to support fos- omy. It focuses on 24 major insurers, assessing sil fuels or low-carbon technologies help shape and scoring their policies on coal insurance and the global economy. divestment, and other aspects of climate leader- They have warned about the risks of climate ship. (See the illustration on page 4 for a list of change for decades, particularly in Europe. the 24 companies.) The report highlights prog- Continuing to support the coal sector is ress and gaps, calls out leaders and laggards, 1 Intergovernmental Panel on Climate Change, Global Warming and identifies challenges and opportunities for of 1.5°C, October 2018 the year ahead.6 2 Ibid., Summary for Policymakers, p. 22 3 CoalSwarm, Global Coal Plant Tracker, updated by Urgewald 4 See Simons, M. and J. de Wilde, The Involvement of European 5 The term “policies” refers to binding operational guidelines, not Insurance Groups in the Fossil Fuels Sector, Profundo, April insurance contracts in the context of this report. 2017; Cynthia McHale and Rowan Spivey, Assets or Liabilities? 6 While the focus of the report is on coal, it also scores the role of Fossil Fuel Investments of Leading U.S. Insurers, Ceres, June insurers in underwriting tar sands, the most carbon-intensive 2016 form of oil, and other extreme fossil fuels. INSURING COAL NO MORE: 2018 Scorecard on Insurance, Coal and Climate Change 3 Sunrise_Scorecard_US__Nov2018.indd 3 11/26/18 2:48 PM INSURANCE COMPANIES ASSESSED IN THIS REPORT PROGRESS IN THE LAST YEAR: • At least 19 major insurers have now divested from coal.9 Generali, Lloyd’s, Hannover Re • Europe’s four biggest primary insurers have and French insurers AG2R La Mondiale and now limited insurance cover for coal, as Groupama announced new policies, while Allianz and Generali joined the early movers AXA, Allianz and Munich Re strengthened ear- AXA and Zurich. The traditional power sector lier policies. The combined assets covered by underwriter XL Catlin also halted services to divestment policies increased from $4 trillion coal projects when it was acquired by AXA. to more than $6 trillion, or from 13% to 20% The market share of non-life insurers that of the insurance industry’s global assets. have limited support for coal more than 7 doubled from 3.1% in 2016 to 7.3% in 2018. Leading power insurance brokers report that (Their market share in commercial property the contraction of coverage for coal projects has and casualty insurance is likely higher.) begun to impact their market. In its 2018 Mining Risk Review, insurance broker Willis Towers • Reinsurance giants Swiss Re and Munich Re Watson warned that finding insurance for coal “is also limited cover for coal, joining SCOR, which likely to become increasingly challenging – espe- took limited action last year. The market share cially if North American insurers begin to follow of non-life reinsurers which have restricted the European lead”.10 their support for the coal sector increased from 3.8% in 2016 to 33.4% in 2017.8 9 The 19 companies are: Aegon, AG2R La Mondiale, Allianz, Aviva, AXA, California State Compensation Insurance Fund, CNP, Generali, Groupama, Hannover Re, Lloyd’s, the Markel Corporation, Munich Re, Natixis, Oslo Pension & Insurance, SCOR, Storebrand, Swiss Re, and Zurich. They all have assets of at least 7 Based on figures from Fundación Mapfre, 2017 Ranking of the $10 billion except Lloyd’s, see footnote 29. The Markel Corporation Largest European Insurance Groups has indicated its divestment in a survey by the California 8 Based on A.M.Best, World’s Largest Reinsurers, September 5, Department of Insurance but has not confirmed it in public. 2017, exhibit 1 10 Willis Towers Watson, 2018 Mining Risk Review 4 INSURING COAL NO MORE: 2018 Scorecard on Insurance, Coal and Climate Change Sunrise_Scorecard_US__Nov2018.indd 4 11/26/18 2:48 PM This report awarded the highest scores to Swiss projects. Australia’s QBE is currently reviewing its Re ahead of Generali, Zurich, Allianz and AXA coal underwriting and investment policies. for their underwriting policies. Swiss Re got high Even the coal exit policies of European insur- marks because its policy covers not only coal but ers contain large loopholes. Some fail to cover also tar sands and other extreme fossil fuels, leading coal developers because their definition addresses new and existing projects, and unlike of coal companies is exceedingly narrow. Others in the case of most of its peers, covers both fac- do not apply to certain types of insurance (e.g. ultative and treaty reinsurance. treaty reinsurance) or only restrict certain coal The report awarded the highest scores to Swiss projects (e.g. lignite power plants). Most divest- Re ahead of AXA, SCOR and Zurich, and Allianz ment policies do not apply to assets insurers for their divestment policies. Swiss Re again manage on behalf of third parties – more than $1 stood out because its divestment policy also cov- trillion in the case of Allianz. ers companies involved in tar sands exploitation Several insurers have not published their coal pol- and Arctic drilling. icies, or only in the form of general principles. This makes it difficult to hold them to account for their The highest scores for other climate leadership commitments. Veteran insurance practitioners efforts were awarded to AXA, ahead of Aviva and have expressed doubts whether insurers are con- Zurich, and Allianz and Swiss Re. AXA received sistently applying the policies they have adopted. high scores because it actively advocates for cli- mate action in public and in international bodies, is strongly involved in the Task Force on Climate- related Financial Disclosures (TCFD), and has made climate change a Board-level topic. “It is very very GAPS AND LOOPHOLES important that While the shift by insurers away from coal is positive and promising, it needs to be broadened we change our and deepened to reach critical mass: With the exception of Hannover Re, Mapfre and business model the Lloyd’s insurance market, all leading European insurers assessed in this report have ended or and prepare for limited insuring coal.
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