The Japanese insurer Tokio Marine, one of the world’s top 10 coal insurers, published yesterday its new climate strategy, which includes its position on the coal sector. Tokio Marine coal policy comes a few days after the one from its peer Sompo and goes a bit further in terms of coal restrictions. It excludes the coverage of new coal power plants worldwide but still mentions a lengthy list of potential exceptions. The policy does not cover the insurance of coal companies, so Tokio Marine still has a long way to go to adopt a comprehensive coal phase-out policy.
1. What is new?
Tokio Marine published on September 28 on its website its new Climate Strategy. It covers the coal sector with two concrete measures:
- The end of the provision of insurance coverage to coal-fired power generation projects, with some exceptions;
- The end of the direct financing of coal-fired power generation projects, with some exceptions.
2. Our analysis: a missed opportunity
Tokio Marine becomes the second global Japanese insurer to adopt a coal policy covering its underwriting activities, only a few days after its peer Sompo adopted a very weak policy on September 23.
This policy goes further than the one from Sompo since it is not limited to Japan and applies worlwide. Moreover, it mentions that it “may” grant some exceptions to the general rule to end the coverage and direct financing of new coal plants.
Nevertheless, the exceptions mentioned by Tokio Marine are quite vague and general, dealing with “national energy policy in the relevant country”, the OECD guidelines or the “the availability of other options and alternative technologies”. These exceptions are broad enough to allow the coverage or the direct financing of many new coal plants still planned around the world.
Tokio Marine has anyway not been very active in project finance: it was impossible to find any such deals in the international financial database IJGlobal in the past 20 years.
More importantly, the policy does not cover the direct coverage or financing of new coal mines or new coal infrastructures, neither the provision of insurance nor investments in coal companies. This is the biggest gap in this coal policy since most of the financial services are provided at the corporate level rather than at the project level.
This is why Tokio Marine new coal policy only changes one out of the five criteria in the Coal Policy Tool, the project level criteria, from 0 to 4.
Tokio Marine scores in the Coal Policy Tool
This table shows the scores of Tokio Marine coal policy as an insurer on five criteria of the Coal Policy Tool.
Tokio Marine missed the opportunity to become the first global Japanese financial giant to adopt a blanket exclusion for new coal plants worldwide, without any exceptions. It also missed the opportunity to become the first Asian financial player to exclude some coal developers at the corporate level, companies still planning to build new coal mines, coal plants and coal infrastructure around the world. According to the latest financial data available from September 2019, Tokio Marine had invested $2 343 million in 16 coal plant developers. Like for Sompo, this new coal policy lags far behind the ones adopted by 20 insurers and reinsurers in Europe, the United States and Australia so far.
Tokio Marine must quickly update its coal policy with these next steps. To adopt a comprehensive coal exit policy and align with best practices in the sector, such as AXA, it must also exclude the most exposed and biggest companies in the coal sector, and adopt a comprehensive strategy to phase-out coal by 2030 in the OECD and 2040 worldwide.
3. Our conclusion
With its new coal policy, Tokio Marine went just a bit further than its peer Sompo a few days ago, but the policy remains weak, only covering the insurance of new coal plants. The most worrying lies in the general list of potential exceptions coming with it. Tokio Marine must quickly revise this policy to get rid of all these exceptions and start to tackle the bulk of the problem: the exclusion of the coverage and investments in coal companies, starting with coal developers. To “aim at achieving the 2-degree Celsius target set in the Paris Agreement adopted at COP21”, as it claims, would require Tokio Marine to already address the oil and gas sectors in its climate strategy.