Sompo, one of the top three Japanese non-life insurers, became the first Asian insurer to rule out insurance and investment in coal companies, following its annual general meeting held on Monday.
Sompo committed to rule out underwriting and investment in coal companies without transition plans by 2025. The insurer defined a “coal company” as a business that derives more than 30% of its revenue from coal power plants, coal mining or oil sand mining, or a power utility with more than 30% of its electricity generated from coal.
The insurer also announced its new membership in the Net-Zero Insurance Alliance, which is part of the Glasgow Financial Alliance for Net Zero.
However, the Insure Our Future campaign noted that Sompo's policy is silent on how it plans to evaluate the credibility of transition plans at coal companies and fails to mention oil and gas. The environmental campaign for the insurance industry said that Sompo must strengthen the transition plan requirement to close all coal-related assets by 2030 in EU/OECD countries and by 2040 globally, in order to align with science-based pathways such as the International Energy Agency’s net zero scenario and the One Earth Climate Model’s decarbonization pathway.
“Sompo is the first Japanese financial institution to restrict coal-related companies, while other major financial institutions have project-based exclusion policies only,” said Yuki Tanabe, program director of the Japan Centre for a Sustainable Environment and Society. “We welcome Sompo's pioneering efforts and would like to urge other financial institutions to urgently develop policies at the same level or higher.”
On May 27, Sompo updated its climate policy, ruling out new tar sands projects and energy explorations in the Arctic Refuge, but it did not cover most other oil and gas projects. According to Insure our Future, Sompo, Tokio Marine and MS&AD must follow their 10 global peers who committed to ban or restrict underwriting oil and gas projects.
“Sompo’s enhanced coal policy is a statement that the company is serious about its net zero commitment unlike its Net Zero Insurance Alliance peers, Tokio Marine and MS&AD, who continue to drag their feet on coal,” said Minyoung Shin, Asia coordinator of the Insure Our Future campaign. “The UN-backed Race to Zero campaign has made it clear that you can’t commit to net zero while continuing to support the development of new fossil assets. We urge all Asian insurers to enhance their fossil fuel policies in line with the global standard.”