Axis pulling away from coal and oil sands
A shift away from underwriting and investing involving dirty energy has been announced by Axis Capital Holdings Limited.
It follows a report that the company had dropped out of bidding to provide insurance coverage for the Carmichael coalmine, a major project in Australia.
The new policy was announced yesterday and addresses thermal coal and oil sands-related underwriting and investments.
The Bermudian-based company said it is a component of a broader corporate citizenship programme led by its general counsel Conrad Brooks, and overseen by president and chief executive officer Albert Benchimol and the Corporate Governance and Nominating Committee of the Axis board.
The programme focuses on four key areas: environment, diversity and inclusion, philanthropy and advocacy.
The new thermal coal and oil sands underwriting and investment policy, which becomes effective on January 1.
On the underwriting side, Axis said it will not provide new insurance or facultative reinsurance for the construction of new thermal coal plants or mines and their dedicated infrastructure or oil sands extraction and pipeline projects and their dedicated infrastructure; or to companies that generate 30 per cent or more of their revenues from thermal coal mining, generate 30 per cent or more of their power from thermal coal, or hold more than 20 per cent of their reserves in oil sands.
In addition, renewals will be considered on a case-by-case basis until the beginning of 2023. Exceptions to the policy may be considered on a limited basis until January 1, 2025 in countries where sufficient access to alternative energy sources is not available.
Axis also said it will not make new investments in companies that generate 30 per cent or more of their revenues from thermal coal mining, that generate 30 per cent or more of their power from thermal coal, or that hold more than 20 per cent of their reserves in oil sands.
“We believe insurers have an important role to play in mitigating climate risk and transitioning to a low-carbon economy,” said Mr Benchimol.
“This policy is in line with our broader strategies such as reducing investments in lines that do not align with our long-term approach; investing in growth areas, such as renewable energy insurance where we are a top-five global player; and growing our corporate citizenship programme, a core focus of which is creating a positive environmental impact.”
While Mr Brooks said: “We strive to ensure that every business decision we make is guided by our corporate values, and we believe this new thermal coal and oil sands policy is the right thing to do for our planet and our business.”
A United Nations report has found that phasing out coal power worldwide by 2050 could limit global warming to 1.5C through reduced carbon emissions.
A number of insurance companies in Europe and Australia have stepped up efforts to pull away from the coal industry, including Axa, the parent of Axa XL, Chubb, Allianz and Zurich Insurance Group.
While Swiss Re was named as the best insurer in terms of policies on coal insurance, divestment and climate leadership in a survey of 24 major insurers by Unfriend Coal campaign last year.
Peter Bosshard, co-ordinator of the Unfriend Coal campaign, said: “With Axis Capital, reinsurers controlling 45 per cent of the non-life market have now adopted coal exit policies.
“No longer covering coal is quickly becoming the global norm for responsible insurers and reinsurers, and the laggards in the United States, in East Asia and on the Lloyd’s market must quickly follow suit.”
In a statement, the campaign noted that Axis’s policy includes exemptions for “countries where sufficient access to alternative energy sources is not available” over the next five years, which it believes could allow it to cover the majority of the 800-plus coal-fired power plants currently proposed globally, effectively postponing action until 2025.
Since the launch of the Unfriend Coal campaign two years ago, 17 insurers and reinsurers have adopted policies restricting coal insurance and four have adopted policies on tar sands insurance. More than half of these policies were adopted this year.
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