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This article is part of our latest article DealBook special report about the trends that will shape the coming decades.
Insurers have a uniquely powerful role in addressing climate change – and can help identify that role. coal industry‘ its very existence in the next twenty years, if not sooner. Not only are insurers among the largest institutional investors, their ability to withdraw insurance coverage can hamper a company’s operations.
Insurance companies also pay when climate change causes natural disasters that cost the industry. $82 billion last year According to insurer Munich Re.
French insurance company AXA eagerly bent its arms to reduce its carbon emissions. In 2015, AXA became the first insurer to begin a coal divestment and is now president of the Net-Zero Insurance Alliance, a commitment signed by eight of the world’s largest insurers and reinsurers committed to owning a net-zero insurance portfolio. greenhouse gas emissions by 2050.
Most of the signatories are European insurers. US insurers, including AIG and Berkshire Hathaway, did not agree to the terms. Thomas Buberl, CEO of AXA, took it upon himself to change that.
Perhaps you were the first to embrace the role of insurers in climate change. What guided your decision?
We saw this whole question about the climate transition very early on because as an insurer you basically have two perspectives: you have the investment perspective and you have the insurance perspective. And from an insurance perspective, you’ll also see the claims later. And from the very beginning what we saw was this: Yes, investment in coal, etc., seems like a pretty isolated and attractive investment – but then what happens to natural disasters and corporations when you get involved in the claims side? flood, fire, etc. Do we make insurance? What happens to the health of the patients we have? The equation doesn’t work.
Why do you believe insurance is the key to excluding the coal industry?
Even if all insurers say “we don’t invest in coal anymore” and all banks say “we don’t invest in coal anymore”, there are also private individuals who say “we don’t invest in coal for you”. money for coal.” Whereas on the insurance side, if you don’t have insurance, you won’t have financing – whether private or public, from an insurer, an asset manager, whatever.
So we said, “Look, bringing together a large part of this market, because [there’s] Let’s say 12, 15 actors doing this around the world – if we get together and agree on the principles of what to do, we still insure and what we no longer insure – without violating antitrust rules – we will create a very strong company. coalition to really get this market out.
There are several ways the government can intervene in this matter. A regulator may integrate capital fees for unsustainable investments. Or it could take a classification approach for green activities, as in the European Union. Should this happen or will it happen in the US?
See other fields like diversity quotas. Why did they come? Because companies didn’t do their work early enough. Being proactive and working on boards, management teams, etc. making sure there is enough variety. And that’s why I always believe on the basis that you don’t need government if you just handled it on your own. Unfortunately, it doesn’t always happen. But in this case, I think, it’s still early enough to figure it out on our own.
You met in person with the executives of major insurance companies to encourage them to sign the commitment. When you talk to them, what is their biggest concern?
This is the question of what does it mean for my relationships, what does it mean for my business if I exclude customers. It’s true, on the insurance side, on the insurance side, all these industries are huge customers.
When we got out of coal investment – I had a talk from my investment team. “Are you crazy? You will never find investments with the same return.” Now that I look at it, five years later, we’ve exceeded $20 billion – now our goal is to move further $24.25 billion – we’ve invested that money in green investments. Yield isn’t much different from what we’ll see in the coal industry. The same was true on the insurance side. By no longer providing corporate use. We had to give up a significant amount of work. But did you see any drop in our gross numbers? No, you didn’t.
In 20 years, will major insurance companies insure coal?
You don’t have to wait 20 years for this.
Will they be dating in five years?
No, but if you get us: we’re all out of coal in the OECD [Organization for Economic Cooperation and Development] By 2030 and non-OECD by 2040. I believe that the pressure is increasing day by day in non-OECD countries as well. Therefore, these dates will probably be pushed forward. I’d say 10 years from now, you’ll be mostly outside.
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