The sector is creating its own plan in the name of climate change and cutting back on its risks.
European insurance companies are boosting their investments in green energy at the same time that they’re letting go of certain carbon intensive businesses. This move is being made for the purpose of doing their part to cut back on risks associated with climate change.
This move was announced at the same time that 200 countries meet in Poland to discuss climate initiatives.
As a growing number of countries around the world place a greater focus on their green initiatives and climate change strategies, the European insurance companies are stepping up with their own efforts. This makes sense as insurers are among the first to be affected by the impact of changing climate trends. As major storms, wildfires and other natural disasters become more frequent and severe, so do insurance claims.
A recent Forbes report questioned whether American insurance companies will take similar steps. For the European insurance industry, the move is easily a business one. These businesses don’t want to be the ones footing the bill as claims become more frequent and expensive. That said, it is also a response to rising public pressure from environmental groups and activist investors which underscored the strategy as a positive business move not only to reduce future expenses but also in terms of brand perception.
The European insurance companies are giving more to green energy and less to coal and oil.
Europe’s second largest insurance company, AXA said it was eliminating coverage for coal power-related projects. It is also removing coverage for oil pipelines used for the transportation of tar sands (a thicker form of fuel which is dirtier than oil and more difficult to clean in the case of spills).
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According to AXA, the short-term cost of its move will be $100 million. That said, the insurer earned revenues approaching $100 billion last year.
“As a global insurer, we see the long-term risks for people and society with climate change. This is why AXA decided a few years ago to use every lever possible to tackle climate change,” explained AXA chief executive, Thomas Buberly.
Buberly pointed out that the firm is leading the way among European insurance companies. It is investing 12 billion euros in green initiatives and divesting 3 billion euros from carbon-intensive projects, mainly in the form of coal. That said, they have also stopped covering construction projects for coal-fired power plants or any operating to mine oil sands or transport it through pipelines.