Press release – Reclaim Finance
March 16, 2021 – Today, Swiss Re announced new climate targets. Among them is a commitment to completely eliminate thermal coal from its insurance portfolios, and particularly from complex reinsurance treaties, by 2030 (OECD) and 2040 (rest of world). If implemented correctly, this policy change marks a breakthrough in the insurance industry – Reclaim Finance calls on SCOR to follow suit.
More than 20 insurers and reinsurers have adopted coal policies, but only AXA has announced a robust coal exit policy aligned with a 1.5°C target – according to the Coal Policy Tool, which assesses and compares all policies adopted by financial actors on coal. Of the four major global reinsurers with a coal policy, Swiss Re, Munich Re, Hannover Re and SCOR, only Swiss Re has committed to apply its policy to reinsurance treaties from 2023. The latter constitute a major part of reinsurance contracts but are complex contracts that cover all the risks of a certain type of client with diverse profiles or activities. The other policies, including that of SCOR, only apply to reinsurance for facultative coverage, which only covers a specific risk.
Today, Swiss Re announced that in 2023, it will introduce new exposure thresholds on thermal coal for reinsurance treaties in its property, engineering, casualty, credit and surety, and marine cargo lines of business, and that it will gradually lower these thresholds until they are completely eliminated (1). However, no thresholds are specified at this time.
“Swiss Re confirms its ambition to apply its coal policy to reinsurance treaties and clearly leads the way by setting full exit targets in line with Paris. We welcome this announcement and call on other reinsurers, starting with the French company SCOR, to follow this example. The climate emergency is here and it is no longer acceptable to see reinsurers, the ultimate risk managers in our societies, shirk their responsibilities and hide behind the complexity of reinsurance treaties to continue to support the coal industry” comments Lucie Pinson, founder and director of Reclaim Finance.
“We regret, however, the lack of detail on the criteria that will be applied, given that it has been more than two years since Swiss Re announced its ambition to apply its coal policy to reinsurance treaties. There can be no exit from coal without a halt to its expansion and we call on Swiss Re to immediately commit to excluding developers of new coal projects as soon as its policy is applied to reinsurance treaties. Failing that, we call on Swiss Re, SCOR and other reinsurers to stop signing reinsurance contracts with insurers that continue to cover the risks associated with the construction of new coal plants, mines and infrastructure,” continues Lucie Pinson.
In early March, the Insure Our Future network wrote to ten of the world’s largest reinsurance companies, including Munich Re, Hannover Re, SCOR, Berkshire Hathaway, Lloyd’s of London, MAPFRE and Vienna Insurance Group, asking them to take steps to exclude coal from their treaties (2).
Swiss Re has also announced a 35% reduction in the carbon intensity of its investment portfolio from its 2018 level by 2025.
- AXA and Allianz, also members of the Net-Zero Asset Owner Alliance, have likewise adopted targets to reduce the CO2 emissions related to their portfolios by 2025. While their targets of 20% and 25% respectively are lower than Swiss Re’s, it is difficult to compare them since the latter are in absolute terms and not based on a relative metric such as carbon intensity.
- Swiss Re has announced its intention to influence its portfolio companies by engaging them in a systematic way to encourage them to adopt a climate strategy. As with the insurance component, there is a lack of detail to assess the seriousness of this commitment.
- According to the Production Gap Report, hydrocarbon production must decline by 6% per year by 2030 and Swiss Re should focus its efforts on companies that need to transform but are already willing to make the transition. Those which are developing new fossil fuel reserves, especially in the riskiest sectors, and in contradiction with the basic recommendation of climate scientists, should be immediately excluded from their portfolios.