- Insurance giant sets precedent by developing policy based on climate change
- Existing investments and insurance policies with coal-associated companies to phase-out in 2022
- Market economics and fears about climate change costs could drive a trend among global insurers
The Swiss insurance giant Chubb in early July announced that it is halting all business ties to US companies that build or operate coal-fired power plants; also impacted are plants earning more than 30% of their revenues from coal-linked activities. By doing so, the Swiss insurance giant became the first global insurer doing business in the US to sever its relationships with the coal industry, showing the growing economic impact that rising fears—and costs—of climate change are already having on companies’ bottom line.
Chubb’s decision highlights the burgeoning value of investment in sustainable energy as more and more firms across the globe are moving down the path to 100% renewables. “Making the transition to a low-carbon economy involves planning and action by policymakers, investors, businesses and citizens alike,” said CEO Evan G. Greenberg.
Interestingly, the first-ever news that a company will stop selling insurance policies to firms associated with coal didn’t come as much of a surprise to some industry leaders, like Richard McMahon Jr, senior VP of energy supply and finance at the Edison Electric Institute, who said: “We didn’t see [Chubb’s announcement] as anything out of the ordinary.” It’s market economics plain and simple, he added, and reflects the direction that utilities and businesses more broadly are moving. “The basic idea is that our industry is leading the transformation to the lower carbon energy economy and not being disadvantaged by it.”
The move isn’t expected to adversely impact US utilities, which have been moving towards a portfolio including more abundant renewables and natural gas. Chubb stated all existing investments and insurance policies with coal-related entities will end by 2022, though industry trade groups do not see any adverse effects to investment performance by those companies impacted.
What we’re Reading: “Chubb is first insurer to cut ties with coal, utilities say impact minimal,” as published on Utility Dive