Sixty U.S. companies have teamed up to persuade American insurers to ditch fossil fuel-based businesses.
In a letter to insurers, these businesses said: “As insurance customers, we are expressing our desire for insurance coverage…that isn’t tied to supporting fossil fuels and actively supports renewable energy.”
Businesses, including Unilever group company, Ben & Jerry’s, and outdoor-gear producer Patagonia have teamed up under the ‘Insure Our Future.’ It is a campaign by environmental, consumer protection groups, and grassroots organizations.
The campaign has been holding the insurance industry accountable for its role in the climate crisis. It advocates a rapid shift of the insurance sector from providing covers and finances to fossil fuel-based businesses to accelerate the transition to a clean energy economy.
“The insurance industry is underwriting and investing in fossil fuels, which we now know are the key drivers of climate change. The decision to continue to support the fossil fuel sector is in direct contradiction to the action necessary to mitigate the climate crisis and to the economy’s long-term financial stability,” Insure Our Future said in the appeal.
“As insurance customers, we are, therefore, expressing our desire for insurance coverage in the U.S. market that isn’t tied to supporting fossil fuels and actively supports renewable energy.”
According to Insure Our Future, so far, four major U.S. insurers have taken such action. They have recognized global warming’s increasing cost. They have acknowledged the urgent need to accelerate the transition to a clean energy economy by redirecting funds from fossil fuels to renewable energy as quickly as possible.
According to Insure Our Future, aligning insurance procurement policies with climate goals makes good business sense. It is a tangible solution from the corporate sector.
Almost 20 of the world’s largest insurers controlling more than 46% of the reinsurance market, and 9.5% of the primary insurance market have already announced coal exit policies.
According to IEEFA, globally, insurers have divested roughly $8.9 trillion of investments in coal – over one-third of the industry’s global assets. Some 35 companies have taken action, up from 15 companies since 2017, with $4 trillion in assets under management. In December last year, DB Insurance, the first South Korean insurer, announced a formal coal exit policy. Korean Teachers’ Credit Union and the Public Officials Benefit Association joined hands with DB Insurance to refrain from new coal investments.
Besides insurers, several banks have also decided to pull the plug on coal. Here are a few recent announcements of international banks ditching coal:
Deutsche Bank has tightened its fossil fuel policy, providing a stricter framework when dealing with business activities involving coal, oil, and gas. The bank is likely to end its global business activities in coal mining by 2025 as a move to facilitate the transformation to a sustainable economy. British multinational banking and financial services company Standard Chartered has also pulled the plug on any upcoming coal-fired power plants across the globe.
The United Overseas Bank (UOB), Southeast Asia’s third-largest finance group, announced that it would stop funding coal-powered projects. Before UOB decided to quit funding coal projects, two other big banks from Singapore, OCBC and DBS, had taken the same decision in support of sustainable development without fossil-based fuels.
Then, HSBC, another well-known banking company, withdrew from the coal-fired power sector. It should be noted that HSBC, which is Europe’s largest bank, had significantly restricted its support for coal-fired stations back in 2011 itself. It also had stopped financing them in 78 developed countries.
U.S.-based JP Morgan Chase, one of the world’s largest banking institutions, announced that it had committed $50 billion (~₹3.59 trillion) towards green initiatives as part of a larger $200 billion (~₹14.37 trillion) commitment towards the United Nations Sustainable Development Goals. The banking giant said that the committee aims to address a broader set of challenges in developed and developing countries to narrow down persisting social and economic development gaps.
Debjoy is a Senior Assistant Editor at Mercom. Debjoy brings more than two decades of experience in frontline journalism, spending most of his career working for dailies like Business Standard and The Economic Times. He has reported on a vast array of sectors, including power and renewables. A graduate in business economics, Debjoy is an amateur 3D digital artist and a photographer. More articles from Debjoy Sengupta.