CA insurance companies urged to divest from coal for power plants
February 1, 2016
The State of California, having recognized the threats to climate from greenhouse gas emissions, has called for insurance companies to voluntarily divest from all thermal coal investments. Thermal coal is burned in power plants to produce electricity for the power grid.
California's insurance commissioner is urging insurance companies to make no new or renewed investments in coal, and to sell or withdraw from existing investments.
Commissioner Dave Jones is the first insurance regulator in the nation to urge insurance companies to divest from thermal coal. Jones explained, "Insurance companies divesting thermal coal assets will help reduce coal combustion, the single largest contributor to global climate change in the United States."
Jones also announced that in April he will initiate a call for data, making it mandatory for insurance companies to disclose their annual carbon-based investments. These will be available to the general public and will be used by the Department of Insurance to evaluate the level of financial risk insurance companies face from these carbon-based investments.
Jones supervises the largest insurance market in the United States and sixth largest in the world. California insurance companies collect $259 billion in premiums annually.
As states in the U.S. set stricter air quality requirements and nations begin honoring the commitments they made in the United Nations COP21 Climate Summit in Paris to reduce carbon, investments in coal and the carbon economy will face the risk of becoming a good of diminishing value. This would create financial risks to those companies holding those investments. As commissioner, Jones has a duty to ensure insurance companies address the potential financial risks they hold in the reserves to pay for future claims.
California continues to diminish its carbon output and move to clean, renewable energy sources. CalSTRS and CalPERS, two of the world's largest pension funds, are now required by state law to divest their thermal coal investments by July 2017.
Allianz, an international insurance company and one of the world's largest financial asset managers, has also announced its plan to decrease investments in companies using coal and increase funding to companies using more wind power.
"California Insurance Commissioner Dave Jones Calls for Insurance Industry Divestment from Coal." California Department of Insurance, 25 Jan. 2016. Web. 01 Feb. 2016.