Following in the footsteps of major European insurers Allianz, AXA, Generali and SCOR, two French insurance firms, Macif and AG2R La Mondiale, will no longer invest in companies planning new coal-fired power plants. Germany’s top utility RWE is among those most affected by the new decision.
In 2017, RWE cumulated nearly 70% of Macif and AG2R La Mondiale’s investments in the 120 companies operating coal-fired power plants, a European coalition of environmental NGOs said in a statement.
The German utility is the world’s largest producer of lignite and Europe’s leading coal-fired power plant operator, it specified, adding that RWE plays a leading role in obstructing Germany’s plans to phase out from its coal industry.
The move by the two companies means that out of the eight insurance companies that used to invest in RWE, only two now remain: French Bank BNP Paribas and German reinsurer Munich Re.
“RWE plans the last lignite-fired power plant in Germany, which will contribute to increasing global warming by an average of four degrees,” Katrin Ganswindt, coal and financial expert at German NGO Urgewald, pointed out.
She added that BNP Paribas has financed RWE with $245 million since 2014 and currently holds a $147 million stake in the German company.
Different exclusion rules
The two French insurers adopted different divestment rules. Macif will exclude the 120 most active companies in the coal industry from its investment portfolio, while AG2R la Mondiale will exclude all those that are planning an increase of more than 1% of their total coal production capacity, out of the 282 coal developers listed on the Global Coal Exit List.
At the end of last year, Urgewald – one of the leading voice in the European divestment movement – presented its so-called “Global Coal Exit List”, which contains data on more than 770 coal companies.
This database is intended to help the financial industry identify companies that trade, produce or build coal-fired power plants. The companies listed represent 88% of global coal production and 86% of global coal-fired power capacity.
French banks “overtaken”
The NGOs welcomed the move ahead the world community gathering in December for the next – and crucial – United Nation’s climate conference (COP24) in Katowice (Poland) where it is expected sustainable finance will be a major issue.
But they underlined that 630 GW of new coal capacity is still being planned worldwide, including 61 GW in Europe, even though the current global carbon budget does not allow any further building of new coal plants.
A carbon budget is the cumulative amount of carbon dioxide (CO2) emissions permitted over a period of time to keep within a certain temperature threshold.
The Paris Agreement’s central aim is to keep global temperature rise this century well below 2°C above pre-industrial levels and to pursue efforts to keep within 1.5°C of warming.
“These (financial) decisions are linked to the climate emergency and reflect the growing awareness among financial actors that it is urgent to adopt policies that really refrain a sector from spreading and that we need to quit as quickly as possible,” said Lucie Pinson, from Friends of the Earth France.
“Unfortunately, even though AG2R La Mondiale and Macif follow the commitment made by all the insurers present at the One Planet Summit in December 2017, we are still waiting for Groupama and Covéa to follow as well as other banks and insurance companies in France.
“Formerly leaders on the question of coal, French banks are today being totally overtaken,” she added.
15 insurance groups out of coal financing
A survey conducted by several environmental organisations last November showed that 15 of the world’s leading insurers have already taken far-reaching decisions to phase out coal investments.
A number of insurers also said they will or already are no longer offering insurance products to a large number of coal companies but have so far only submitted letters of intent.