The Insurance Sector adopts a more eco-friendly strategy
With the news this week that one of the world’s largest property and casualty insurers Chubb is to withdraw global insurance and investment policies for the coal industry, it follows a growing trend insurers are adopting towards social responsibility, green initiatives and developing a more ethically-based approach to commercial operations.
US based insurer Chubb’s recent announcement confirms it will withdraw all of its existing policies with coal powered companies over the next 3 years and cease selling new policies to companies that operate/build coal power plants or those where at least a third of their revenue comes from coal mining, a leading source of carbon dioxide emissions and key factor contributing to global warming.
In common with many global insurers Chubb has its own green initiatives and environmental pledges including reducing employee carbon footprint through recycling programs, using more energy efficient heating and lighting systems within their office premises and partnering with eco-friendly charities to plant more trees.
Chubb is the first US insurer to stop supporting the coal industry, perhaps no real surprise given Donald Trump’s withdrawal from the Paris climate change summit agreement. In total more than 100 major financial institutions have joined the ‘Unfriend Coal campaign’ (https://unfriendcoal.com/) although in terms of the insurance sector it has been in Europe where businesses have been the biggest advocates.
So far, European insurers are leading the way with Allianz, AXA and Generali reducing insurance policies for coal suppliers, as have reinsurers Swiss Re and Munich Re by limiting their underwriting. AXA was one of the first insurers to divest from insuring coal businesses in 2015 and despite predicting revenue losses of around £90m due to this policy, it remains committed to green investments and plans to invest £10 billion in green investments such as green bonds and renewable energy projects by 2020. Allianz’s climate strategy includes completely withdrawing from insuring the coal industry by 2040 and Generali has committed €3.5billion to green investments. Further afield, Australia’s largest insurer QBE also announced it will stop insuring new coal mines, power plants and transport links from 1st July 2019.
However without the backing of all the major US insurers the UN may struggle to reach its ‘global ambition business pledge’ of capping global warming at 1.5 degrees this century. As long as the coal industry can find the insurance it needs to operate it shows no real intent to lower Co2 emissions, therefore the responsibility of global insurers has never been more important.
The insurance sector as a whole has become more socially aware and responsible in terms of corporate attitudes towards climate change and in return offers its policy holders more security. Ultimately, it is their own customers who at most risk from the effects of climate change resulting in increased flooding, wildfires and hurricanes. Lloyds of London has already predicted that the cost of global warming to insurers could reach as much as $150 billion a year by 2030 potentially leading to higher premiums. Lloyds themselves reported a loss of £1billion for 2018 due to major natural catastrophes.
Whether it be challenging the coal industry or reducing our own carbon footprint we can all contribute to a greener way of life and greater sustainability. Millennium Consulting has recently launched a green agenda (https://www.millenniumconsulting.co.uk/green-agenda/4594651339) to monitor the carbon impact our business has and to start introducing new ways of reducing carbon footprint with a target of becoming carbon neutral by 2022.