Hannover Re and its parent firm Talanx Group are the latest to distance themselves from the controversial fossil fuel which has seen environmentalists up in arms.
“The Talanx Group is withdrawing from the provision of insurance protection for coal-based risks over the long term.” This was the insurance group’s opening line when it pledged its commitment to the “process of transformation” towards a lower-carbon economy.
Hannover Re’s parent believes the move lives up to the goals of the Paris Agreement on climate change which the group noted it has been supporting for years. In addition, the German enterprise said it will engage in a dialogue with customers to find constructive means to strengthen climate protection.
Effective immediately, the Talanx Group will “in principle” no longer write risks associated with planned new coal-fired power plants and coal mines. However, this is not always applicable, and an explanation has been offered.
“In countries where coal accounts for a particularly large share of the energy mix and access to alternative energy sources is insufficient, the Talanx Group will allow a limited number of exceptions for the provision of insurance protection on a case-by-case basis and after reviewing the technical standards,” it stated.
“Bearing in mind that the energy transition away from fossil fuels can only take place responsibly over the medium to long term, it is envisaged that the portfolio will no longer include any coal-fired power plants or coal mines from 2038 onwards.”
When it comes to investing, the insurer is sticking to its existing policy of not making new investments in companies that generate at least 25% of their revenues from fossil fuel sources. Also, it will continue to progressively expand the group’s investments in renewables and climate-friendly technologies.
Hannover Re, meanwhile, announced that it is also scaling back its coal exposure over the long term. “In addition to excluding coal-based projects from its investment universe, the group is now also adopting a more restrictive underwriting policy on the reinsurance of coal-based risks,” said the major reinsurer.
Like its parent firm, Hannover Re will now also restrict its underwriting as a general principle with a few exceptions. The same rationale – particularly in places where alternative forms of energy are not common enough – was provided, as well as the same 2038 portfolio target.
Commenting on the announcements, Urgewald’s Regine Richter cited the need for “a consistent halt” to the insurance and reinsurance of coal. Germany-based Urgewald is a partner of the Unfriend Coal campaign.
“Talanx and Hannover Re are keeping large back doors open for coal support via exceptions,” asserted Richter. “The interpretation of their rules will show how serious they are about climate protection.”
Lucie Pinson, European coordinator for Unfriend Coal, added: “We welcome the move but need more details on how Hannover Re and Talanx plan to bring their exposure to coal plants and mines to zero by 2038.
“Climate science makes it very clear that there is no room for new coal and no exceptions should be granted, especially when coal-fired capacity is more expensive than existing renewable capacity. Hannover Re and Talanx must immediately commit to not allow any exception for new coal.”