"As a leader in insurance and investment, we want to promote the transition to a climate-friendly economy,” said Allianz CEO Oliver Bäte in a statement on 4 May. At the same time, Bäte announced Allianz’s complete withdrawal from coal by 2040.
“The insurance company will immediately cease offering insurance solutions to coal-fired power plants or individual coal mines, whether they are in operation or planned,” said the group. Allianz, thus, follows suit with other major insurance companies such as the Italian Generali group or Axa, the French insurance company, as both have made similar announcements of withdrawal from the sector.
Financing a low carbon economy
Companies that generate electricity from several sources, such as coal, alternative fossil fuels or renewable energy, will continue to be insured. The goal of Europe's leading insurer, however, is to completely eliminate coal-related risks from its insurance business by 2040.
"We will work with these customers to find suitable solutions that will allow us to go together against one low carbon economy," said Chris Fischer Hirs, director of the Industrial Risk Division at Allianz.
As a prominent financial market investor, in 2015, Allianz began to exclude from its investments, companies whose shares in coal-related activities exceeded 30%. Since then, Allianz has divested €225 million from the sector, said a spokesman for the group to AFP.
Towards 0% coal
In its future investment decisions, Allianz will ensure that an insured company’s share of coal-related activities decreases from 30% today to 0% by 2040. For the time being, the insurer will no longer invest in companies building "large coal plants". These plants represent a threat to the common goal of limiting global temperatures to 2 °C, according to the Paris Agreement, signed in 2015 in an effort to combat global warming.
Allianz also announced that it is joining the Science Based Targets initiative to align its climate goals with IPCC scientists' recommendations and to keep global warming well below 2°C. The insurer will formulate methods and objectives by the end of the year, it said.
Doubling investments in renewable energy
The group also intends to "double" shares invested in renewable energy projects in the future but will communicate on this matter at a later date, said an Allianz spokeswoman. By the end of 2017, the insurer had invested just €2.5 billion in green energy, while its financial investments totalled more than €660 billion.
With these announcements, Allianz is responding to the demands of Unfriend Coal, a network of international NGOs, which "for months has tried to stop insurance activities in the coal sector, as it is the climate’s main predator," the German NGO Urgewald mentioned in a statement on 4 May. Pressure from pro-environmental actors should, however, continue for the German insurance sector so that it may follow Allianz’s lead. Most notably, this pressure should impact the second-largest German insurance company, Munich Re, which is "lagging behind in climate protection", according to Urgewald.
Béatrice Héraud with AFP