The thermal coal policy applies to both existing and new thermal coal mines, power plants, and is implemented across all lines of business and Swiss Re's global scope of operations. (Photo: Shutterstock)
Swiss Re has begun the implementation of its thermal coal policy, a little over a year after the announcement was first made in July 2017. Under the policy, Swiss Re will not provide insurance/reinsurance to businesses with more than 30% exposure to thermal coal across all lines of business.
The thermal coal policy applies to both existing and new thermal coal mines and power plants, and it is being implemented across all lines of business and Swiss Re's global scope of operations.
The decision to develop a thermal coal policy was based on Swiss Re's commitment to the "Paris Pledge for Action" in 2015 when Swiss Re affirmed its strong commitment to the effort to limit global warming to 1.5°C – 2°C above pre-industrial levels. As a result, Swiss Re supports a progressive and structured shift away from fossil fuels, the company said in its announcement of the policy implementation.
Related: Global insured losses from disasters in 2017 were highest ever, Swiss Re finds
|A framework for sustainability
The 30% threshold applied falls in line with the thresholds used in making investments for the company. Swiss Re had stopped investing in companies that generate 30% or more of their revenues from thermal coal mining or that use at least 30% thermal coal for power generation by the beginning of 2016, as well as divesting from existing holdings, as a means to contribute to a low-carbon environment and actively mitigate the risk of "stranded" assets.
Furthermore, the company said, Swiss Re consistently integrates Environmental, Social, and Governance (ESG) criteria in its investment process. It was among the first re/insurance companies to switch to ESG benchmarks for its actively managed equities and credit portfolios.
In the U.S., the California Department of Insurance, led by Commissioner Dave Jones, launched the Climate Risk Carbon Initiative in 2016. It requires insurance companies doing business in California to divest from thermal coal and to publicly disclose their holdings in oil, gas, coal and utilities, due to potential climate-related risks.
|A brighter day awaits
To further its commitment to limit global warming, In cooperation with solar photovoltaic research institutions, Swiss Re developed an international guideline on risk management and sustainability of solar panel warranty insurance, the so-called Solar Panel Code of Practice (SPCoP). Swiss Re states that it will help all involved parties — including producers, buyers, investors, banks and insurers — to assess the long-term quality and reliability of solar panels and provide them with a best practice risk management framework to mitigate losses.
Swiss Re is also encouraging the use of solar energy through its commercial insurance arm, Swiss Re Corporate Solutions. It has invested in a new product, the Solar Revenue Put, which promotes the development of solar energy by driving down investment risk and making solar energy projects cheaper to finance.
"The implementation of the coal policy is a major step forward in ensuring that our business activities are aligned with the Paris Agreement and related national efforts. We are working with our clients to find the best solutions that enable them to adapt to a low-carbon economy," Edi Schmid, Swiss Re's group chief underwriting officer, said in a statement.
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Denny Jacob
Denny Jacob is an associate editor for NU PropertyCasualty360. Contact him at [email protected].
