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Insuring Coal No More

The Unfriend Coal and Insure Our Future campaigns call on insurance companies to stop underwriting and investing in climate-destroying coal projects. This monthly newsletter shares campaign highlights on climate, coal, and the insurance industry. 

BlackRock’s move: a game changer for insurers and financiers

With $7 trillion in assets under management, BlackRock manages the largest concentration of capital the planet has ever seen. Its portfolio management platform Aladdin is used by another 55,000 investment professionals around the world. With its focus on passive, index-based investments, BlackRock refused to accept responsibility for the climate impacts of the assets it manages for a long time.

Until Tuesday.

The changes BlackRock CEO Larry Fink announced in his new CEO letter include the divestment of its actively managed funds from coal (even if apparently only from coal miners, not from coal power utilities), the presentation of sustainable funds as “standard offering” to its clients and a more active stewardship on sustainability proposals. The sweeping changes are a response to the massive, sustained pressure by the BlackRock’s Big Problem campaign.

While many gaps persist, the changes are, as senior Sunrise Project strategist Diana Best puts it, “a fantastic start...instantly rais[ing] the bar for competitors”. Since the 2008 financial crisis BlackRock has become an epitome of Wall Street greed. Now it states that “with the acceleration of the global energy transition, we do not believe that the long-term economic or investment rationale justifies continued investment in [the coal] sector”. If BlackRock moves away from coal, how can other financial titans such as Vanguard and JP Morgan Chase refuse to do so? How can insurance companies such as AIG, Liberty Mutual and Lloyd’s continue to insure coal?

BlackRock is not just a trendsetter, it is also the third-biggest investor in JP Morgan Chase and among the top-10 shareholders of coal insurers such as AIG, Tokio Marine, Sompo, W.R. Berkley and the Markel Corporation. In his letter, Larry Fink announced that “we will be increasingly disposed to vote against management and board directors when companies are not making sufficient progress on sustainability-related disclosures and the business practices and plans underlying them”.

As ShareAction’s campaign manager Jeanne Martin comments, “if BlackRock is serious about its commitment to phase out thermal coal, it should use its voting rights to get major coal financiers to do the same”. Campaigners will be pushing for tangible action during the 2020 shareholder season.

Liberty Mutual and The Hartford adopt coal policies

Shortly before the holidays Liberty Mutual and The Hartford were the third and fourth US insurers, respectively, to adopt coal exit policies. Liberty Mutual, which according to Finaccord counts among the world’s top-6 coal insurers, announced its new policy on December 13, after being targeted by the Insure Our Future campaign for several months.

According to the announcement, Liberty Mutual will:

  • No longer accept underwriting risk for companies which depend on thermal coal for more than 25% of their business;
  • Not make new investments in thermal coal companies; and
  • Phase out coverage and investments for existing risks that exceed the 25% threshold by 2023.

The Liberty Mutual policy, which has not been published, has important gaps. It does not appear to exclude cover for new coal mine and power plant projects, and remains completely silent on tar sands insurance. “It is just out of the starting gate, but still has a long way to go”, commented Rainforest Action Network (RAN) energy finance campaigner Elana Sulakshana. “Liberty Mutual should expect to stay in the public spotlight until its policies and practices truly meet the urgency of the climate crisis.”

The Hartford’s policy, which was released on December 20, goes beyond the meagre Liberty Mutual commitments. The carrier will

  • No longer insure new coal power plants;
  • No longer insure or invest in new clients which depend on coal or tar sands for more than 25% of their revenues;
  • Phase out existing insurance cover and divest from companies exceeding these thresholds by 2023.

According to Tara Houska, founder of the Giniw Collective, “The Hartford’s decision to stop insuring tar sands extraction companies is great, but the major loophole for tar sands pipelines and oil infrastructure still leaves Indigenous communities and the global climate at risk”. A detailed critique of the new policies is available on the RAN website.

Aegon strengthens coal divestment

Earlier this week Aegon, the Dutch life insurer, announced that it would further reduce its investments in coal. According to the new policy, Aegon will divest from:

  • Companies that derive 30% or more of their revenue from thermal coal mining (a threshold that will drop to 5% in 2029);
  • Companies that produce more than 20 million tons of thermal coal annually or own more than 10 gigawatts of coal power capacity and are expanding coal operations;
  • Companies that derive 30% or more of their total oil production from tar sands and others building or operating pipelines that significantly export tar sands oil.

Greenpeace Netherlands and Urgewald, which had engaged Aegon on the policy, welcomed the new commitments as a “good step in the right direction”, but pointed out that the policy of Aegon International is weaker than the Dutch policy on coal utilities, and that Aegon makes an exception for coal investments through its Polish pension funds.

By now more than 35 large insurance companies with combined assets of more than $9 trillion (or approximately 37% of all insurance assets) have divested from coal in some form.

What 2020 will bring for coal insurers

With Liberty Mutual and The Hartford, the number of insurers moving away from coal has grown to 19. Together the action-takers account for 13.6% of the global insurance and 47.6% of the reinsurance market (measured by non-life premium income). Many insurers which have not adopted coal exit policies do not provide cover in the energy and power sectors anyway, and so the full impact of the shift away from coal goes well beyond the market share of action takers.

In an op-ed in Environmental Finance, Unfriend Coal coordinator Peter Bosshard identifies targets for progress in 2020. He writes that “the shift away from coal has firmly established itself” among European, US and Australian insurers, which makes the continued support for coal by AIG, the Lloyd’s market and East Asian carriers such as Tokio Marine indefensible.

Momentum feeds on momentum, and according to the op-ed, “insurers which still hesitate to do the right thing should be aware that their social license to operate may vanish suddenly as the risks of an unmanageable climate breakdown start to sink in around the world”.

Coal enablers in hot water over sponsorships

In recent months a number of coal insurers and financiers have found themselves exposed to public pressure over their sponsorship deals. In October 2019, 350 Aotearoa delivered a petition with 35,000 signatures calling on New Zealand’s national rugby team, the All Blacks, to drop their sponsorship deal with AIG over the insurer’s refusal to rule out cover for Australia’s Adani coal mine. On January 14, AIG ended its sponsorship for the popular team without giving any reasons.

One day earlier, a Swiss judge acquitted 12 climate activists who had staged a tennis match in a Credit Suisse branch to raise Roger Federer’s attention to the massive role which the Swiss bank, one of his sponsors, plays in financing fossil fuel projects. The judge considered their action "necessary and proportionate" given the climate emergency. Federer recently expressed his “admiration and respect for the youth climate movement” and announced that he would seek a dialogue with his sponsors on “important issues”.

Meanwhile the No Coal Japan campaign has called attention to Tokio Marine, a gold sponsor of the Tokyo 2020 Olympics, over its support for coal. According to Finaccord Tokio Marine belongs to the world’s top-10 coal insurers. Watch this space!

Take action – stop the money pipeline!

As the BlackRock and other campaigns illustrate, fossil fuel finance campaigners are on fire. Close to 30 US NGOs and movements have now started a new campaign under the motto, Stop the Money Pipeline. The campaign will push JP Morgan Chase, BlackRock and Liberty Mutual to take further action to “stop funding, insuring and investing in climate destruction” through a massive public mobilization in spring. You can sign up here.

New to the monthly Insuring Coal No More newsletter? Subscribe for free here!
Got a news story or campaign action you want us to share? Email Peter Bosshard and we’ll look at including it in our next newsletter. 
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