Insurance company Axa has announced its plans to divest from the coal industry.
Axa will no longer underwrite insurance for companies that back fossil fuel extraction and will phase out its own multibillion pound investments in the sector.
The French insurer intends to have exited the coal industry in Europe and other member states of the Organisation for Economic Co-operation by 2030, and the rest of the word by 2040.
According to the Global Coal Exit database, the company’s plans to divest will remove around £515m worth of funding from the coal industry. Axa already revealed two years ago that it would no longer be supporting US oil pipelines with links to tar sands.
The company will also no longer underwrite insurance policies for companies investing in coal-fired power projects with more than 300MW of capacity. Alternatively, it will offer companies “transition bonds” to help facilitate the shift towards clean energy. Axa also intends to reach £19.6bn in green investments by 2030 – double its current position.
The chief executive of Axa, Thomas Buberl, said that the company’s new climate strategy will expedite its contributions to the low-carbon economy, by centering its efforts on transitioning major industries away from coal power.
Buberl said: “It is an absolute priority if we want to reach the objectives of the Paris agreement”.
There has been increased pressure on financial services companies and banks to end their involvement in the global coal industry in order to prevent climate change, protect the environment, and to ensure the safety of their long-term investments.
Generali of Italy, and Allianz of Germany, both announced last year that they would be limiting underwriting for coal companies. From April of last year, Lloyds of London began to phase out coal from its investment strategy altogether.
Axa’s anti-coal strategy has been described by Green groups as a baseline that other companies should follow.
Adviser to Friends of the Earth France, Lucie Pinson, described Axa as having established “a new global benchmark for best practice with this coal phase-out policy”, adding:
“Zero tolerance for coal expansion is the only responsible action in a carbon-constrained world. Financial institutions with weaker coal policies, like BNP Paribas and Talanx, now risk looking flat-footed”.
Finance and utility coordinator at Europe Beyond Coal, Kaarina Kolle, said: “The only defensible position is one like Axa’s. This is the minimum standard for any financial institution committed to the Paris climate agreement’s 1.5C warming limit”.