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Coal divestment pressure shifts to US insurers

Coal divestment pressure shifts to US insurers

A campaign to pressure U.S. insurers to divest from fossil fuel underwriting and investments is being launched, with a major insurtech company becoming the first U.S. sector player to publicly commit to such actions.

The Insure Our Future campaign, part of the global Unfriend Coal campaign that has experienced some success in pressuring European insurers and reinsurers to restrain their coal underwriting and investment, now aims to pressure the U.S. insurance industry to stop insuring and investing in coal and tar sands projects and companies, according to a statement issued on Tuesday.

“We take a lot of inspiration from what’s been happening in Europe,” said Ross Hammond, San Francisco-based senior campaign adviser to the Sunrise Project, which aims to support a fast transition from fossil fuels to renewable energy.

The campaign will demand that U.S. insurers stop insuring coal and tar sands projects and companies, divest from coal and tar sands companies and scale up investments and insurance for clean energy companies and projects.

“The industry needs a push,” he said. “They’re not just going to do it out of goodwill. They need to be pressured, and what we’re asking for is very specific, but doable. What’s lacking is the political will.”

The U.S. effort has moved beyond the European effort to include tar sands divestments because those projects are “a major threat to the climate” and there are sizable development and pipeline projects in North America, Mr. Hammond said.

But not one U.S. insurer has publicly disavowed underwriting or investment in fossil fuels despite the European campaign.

“That changes today,” Daniel Schreiber, chief executive officer of New York-based insurtech company Lemonade Inc. said in a blog post on Tuesday. “Lemonade has over $100 million in investments — none of them in fossil fuels — and we’re committed to keeping it that way.”

“But we're a young company, and our funds are a drop in the ocean, which is why we’re calling on our industry — our reinsurance partners, our competitors and our colleagues in health and life insurance companies — to join us by divesting from coal and other major polluters,” the company continued. “And for insurance companies in the business of underwriting polluting projects we have a simple ask: please don’t.”

“We’re incredibly pleased that Lemonade has decided to be a leader on this,” Mr. Hammond said. “For the older mainline insurance companies, this is where things are headed, so it’s really a question of ‘are they going to get on board or are they going to drag their heels’?”

The 40 largest U.S. insurers hold more than $450 billion in fossil fuel investments, according to analysis by Boston-based investor coalition and sustainability advocacy group Ceres.

The U.S. campaign has already reached out to more than 20 domestic insurers.

“I think it’s notable that we’ve gotten very little substantial response,” with most of their responses focusing on their green building and recycling initiatives, Mr. Hammond said, adding that he is confident, despite the major challenge ahead, that the campaign can get the U.S. insurance sector to move forward with such efforts. “Those companies that don’t get on board will be subject to public campaigning.”

“If they continue to stick with business as usual, they’re going to start losing business, so that usually gets peoples’ attention,” he added.

The campaign will utilize shareholder resolutions to highlight “one or two of the most egregious companies, using the power of investors to try to pressure” U.S. insurers to act, he said.

“This will be something that U.S. insurance companies are going to have to deal with and they’re going to have to deal with it soon because they’re going to start seeing increasing activity at the municipal level, the business level, the regulatory level and the shareholder level,” he said.

California Insurance Commissioner Dave Jones launched the Climate Risk Carbon Initiative in January 2016 to require insurers with $100 million in annual premiums doing business in California to disclose investments in fossil fuels and asked all insurers operating in the state to divest investments in thermal coal.

“From a risk management perspective, companies should disclose to regulators their underwriting of the fossil fuel sector,” Mr. Hammond said. “The oil and gas sector in particular is such a boom-and-bust sector that I think it would be good for shareholders and regulators to know what exposure insurance companies have in the fossil fuel sector.”

The campaign hopes to secure underwriting commitments in the next year, including a major U.S. insurer coming up with a policy similar to policies adopted by European sector players such as Allianz SE and AXA SA, he said.

“We absolutely think that’s possible and we know there are some companies that want to do the right thing, that want to get out in front of their competitors,” he said. “A smart insurance company will see the opportunity to burnish its climate credentials. Part of the purpose of the campaign is to put that opportunity in front of the U.S. insurance sector and see who wants to grab it first.”







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