Hartford latest to pull coal cover and investment as pressure ramps up

US insurance group The Hartford has joined the fast-rising number of leading insurers to announce plans to pull cover and investment from the coal sector. The group also became only the second US insurer and fifth in the world to announce that it would not back the tar sands sector, which scientists agree produces at least 15% more carbon dioxide emissions than petrol produced from conventional oil. Hartford’s announcement followed news from Liberty Mutual, historically one of the biggest supporters of the coal sector, earlier this month that it will no longer accept underwriting risks for companies that derive more than 25% of their profit from the extraction of, or production of energy from, thermal coal. Liberty Mutual also said it will not make new investments in debt or equity securities of companies that generate more than 25% of their revenues from thermal coalmining, or utility companies that obtain more than 25% of their electricity production from thermal coal. Existing coverage and investments exceeding the threshold are to be phased out by 2023. The Hartford also went for the 25% threshold. It said it will no longer insure or invest in companies that generate more than 25% of their revenues from thermal coalmining or more than 25% of their energy production from coal. The company will also stop insuring and investing in companies that generate more than 25% of their revenues directly from the extraction of oil from tar sands. “The world needs affordable, accessible energy to support global economic progress and, at the same time, action is needed to mitigate the impact such activity has on our climate,” said The Hartford’s chairman and CEO Christopher Swift. “Extreme weather affects people’s lives and businesses – and the risks are getting worse. As an insurer and asset manager, we recognise the growing cost of this crisis and we’re determined to use our resources and influence to address the challenge. That’s why we have taken a position on coal and tar sands,” he added. The Hartford also said it will not cover or invest in any new coal-fired plants. The campaign to stop insurers supporting the coal sector is led by a global group called Unfriend Coal. In early December, it published a report and third annual scorecard on insurance, coal and climate change, which said 46% of the reinsurance market and 37% of the industry’s global assets are now covered by coal exit policies. It found that the number of insurers withdrawing cover for coal has more than doubled in 2019, as the industry’s retreat from the sector accelerates and spreads beyond Europe. Before the moves from Liberty Mutual and The Hartford, Unfriend Coal said coal exit policies had been announced by 17 of the world’s biggest insurers controlling 46% of the reinsurance market and 9.5% of the primary insurance market. Action has escalated since international NGOs launched the Unfriend Coal campaign in 2017. The first three companies announced that they would withdraw from the coal insurance market that year. This was followed by four in 2018 and a further ten in 2019. Insure our Future, the group created to specifically put pressure on the US insurance market to catch up with their European peers and part of the Unfriend Coal global campaign, is pleased with The Hartford’s announcement, which followed the news from Liberty Mutual and earlier moves by Chubb and AXIS Capital. Rainforest Action Network energy finance campaigner Elana Sulakshana said: “With this new policy, The Hartford becomes the first mainstream US insurer to restrict support for tar sands oil and coal. In the face of the climate crisis, The Hartford joins a growing movement of insurers taking action to keep coal and tar sands in the ground and accelerate the transition to a low-carbon energy future.” But the pressure groups are not totally satisfied with progress made to date by insurers. Some such as The Hartford and Liberty Mutual were singled out for making a “weak” commitment. Insure our Future also said Chubb needs to do more and that all eyes are now on AIG, which so far has not made any commitment on coal. “The Hartford’s new policy comes on the heels of Liberty Mutual's much weaker coal-only policy announcement last week. By restricting insurance for new coal plants and tar sands companies, The Hartford’s commitments highlight the gaps in Liberty Mutual’s policy,” added Ms Sulakshana. “The [Hartford] policy contains some critical loopholes. Going forward, The Hartford should rule out insuring new tar sands pipelines and other projects, new coalmines and infrastructure, and all companies facilitating the expansion of tar sands and coal. The company must also commit to a timeline that fully phases out coal and tar sands from its insurance and investment portfolios in line with 1.5°C,” she continued. The impact of the coal insurance campaign is being felt already. Life is being made tough for insurance managers within the sector, according to recent reports. Indian conglomerate Adani Group has reportedly already been turned down by 16 international insurers as it seeks support for its Carmichael coalmine in Australia. Greenpeace estimates that this facility will be responsible for some 4.6 billion tonnes of CO2 during its lifetime. The group admitted in a media briefing earlier this year that it would struggle to complete the mine by 2021 without further investment from the family that owns the group. Europe’s insurers and reinsurers are leading the way and the fact that the CRO Forum, an influential body of chief risk officers with Europe’s leading insurance and reinsurance groups, has explicitly urged the industry to use its underwriting and investment muscle to accelerate the shift to a more sustainable basis is clearly good news. But the US sector also needs to step up to the plate, as well as the increasingly powerful Asian insurance and reinsurance sector. Another worrying element is that while headquarters of the global insurers and reinsurers may be making fine-sounding commitments, the reality on the ground in regions of the world such as Africa, Asia and Latin America may feel rather different as local managers struggle to meet revenue and profit targets. Risk managers at insurance and reinsurance companies need to make sure that their public proclamations are taken seriously at the coalface.

Hartford latest to pull coal cover and investment as pressure ramps up

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