Chubb is first big U.S. insurer that won't underwrite new coal plants
The global campaign to encourage insurance companies to phase out support for the coal industry secured one of its biggest victories to date this week, as U.S. insurance giant Chubb Limited announced a detailed new coal underwriting and investment policy.
The company announced it no longer will underwrite the construction and operation of new coal-fired plants or new risks for companies that generate more than 30 percent of their revenues from coal mining or energy production from coal.
In addition, insurance coverage for existing coal-plant risks that exceed this threshold will be phased out by 2022, and for utilities beginning in 2022.
The same standards will be applied to Chubb's investment activity, with the company pledging that it will not make new debt or equity investments in companies that generate more than 30 percent of revenues from thermal coal mining or energy production from coal.
"Chubb recognizes the reality of climate change and the substantial impact of human activity on our planet," said Evan G. Greenberg, chairman and CEO of Chubb, in a statement. "Making the transition to a low-carbon economy involves planning and action by policymakers, investors, businesses and citizens alike. The policy we are implementing today reflects Chubb's commitment to do our part as a steward of the Earth."
The company said the new coal policy is expected to have a negligible impact on premium revenues and no impact on investment performance.
The move is the latest in a string of announcements from global insurance giants that have moved to beef up their sustainable lending activity and reduce their exposure to carbon-intensive assets in recent years. In the last few weeks alone, Zurich has announced a raft of new sustainability goals, while Japan's Nippon Life Insurance is reportedly moving to reduce its exposure to coal investments.
Meanwhile, investors and regulators, such as the Bank of England, are stepping up pressure on insurers to better assess climate risks and reduce their exposure to carbon-intensive assets that could become stranded as economies seek to decarbonize.
U.S. environmental groups welcomed the new policy from Chubb and called on other insurance firms to follow suit.
"With this policy, Chubb has become the first major U.S .insurance company to acknowledge the key role the insurance industry has to play in stopping the climate crisis," said Lindsey Allen, executive director of Rainforest Action Network. "New coal projects cannot be built without insurance, and Chubb just dealt a blow to the dozens of companies that are still betting on the expansion of coal globally. We are encouraged to see Chubb taking real action to address climate change and insure a healthier future."
Mary Anne Hitt, director of the Sierra Club's Beyond Coal campaign, said the policy sent a clear signal that "coal is becoming uninsurable worldwide."
"Fifteen European and Australian insurance companies already restrict insurance to the coal industry," she said. "With the U.S .industry joining this global trend, governments and power utilities should see that the industry is moving beyond coal."