The coal industry will no longer be able to obtain investment or insurance from any Australian-based insurance providers, following confirmation by Brisbane-based Suncorp Group that from 2025 it will no longer do business with the coal industry,and that it will phase-out its investments and insurance exposure to the coal industry by 2025.
Suncorp’s announcement that it will phase out its investments and insurance exposure to thermal coal by 2025 means that all of the Australian based insurance companies have now effectively committed to removing coal from their investment portfolios.
It also represents a complete exclusion on the offer of insurance or underwriting products to the coal sector, an achievement welcomed by fossil fuel divestment campaigners Market Forces.
“Suncorp’s dumping of coal means there is now not one single major Australian insurer willing to provide insurance for new, climate-wrecking thermal coal projects,” Market Forces campaigner Pablo Brait said
The exclusion comes at a crucial moment for the future of Australia’s coal sector, with the mammoth Adani Carmichael coal mine on the verge of commencing construction and with at least six additional projects in the pipeline, threatening an explosion in coal extraction, and greenhouse gas emissions, in the Galilee Basin.
Suncorp’s commitment follows the filling of two shareholder resolutions by Market Forces, which is seeking to compel the Queensland insurance firm to establish a set of targets for reducing the company’s exposure to fossil fuel projects, including coal, gas and oil extraction projects and fossil-fuelled power stations.
The motions would require the company to publish a set of short, medium and long term targets to reduce the company’s investments and underwriting exposure to oil, gas and coal assets and the company would need to ensure these targets are in line with international commitments under the Paris Agreement.
A spokesperson for Suncorp confirmed the company would no longer do business with the coal sector, saying that the coal industry does not represent a significant portion of Suncorp’s business. Not only will Suncorp not enter into any new deals with coal projects but that it will also divest itself of its existing investments and deals with coal projects by 2025.
“Suncorp’s exposure to the fossil fuels industry is not material, being less than 0.5% in the insurance business and investment portfolio, and a negligible proportion of our commercial lending portfolio. Suncorp doesn’t finance fossil fuel projects as it doesn’t have an institutional bank,” a Suncorp spokesperson said.
“Through our Responsible Investment Policy, which was implemented in 2017, we apply a shadow carbon price to reduce financial risk, which we review annually. The practical outcome of this is that we have materially reduced our investment in fossil fuels including thermal coal.”
“As a result of these policies, we do not directly invest in, finance or underwrite new thermal coal mining extraction projects, or new thermal coal electricity generation, and we will phase out of these exposures by 2025. We will seek to increase exposure to businesses that have a positive environmental impact, including renewable energy generation and technology.”
Suncorp’s coal exclusion follows a similar commitment by QBE insurance, with the company announcing in May that it would also no longer do business with coal projects and would seek to divest its existing business with coal projects by 2030.
Multi-national insurance company Allianz, which has a strong presence in the Australian market, has also committed to limit its involvement in the fossil fuel sector, having previously announced it would not invest in companies that derive more than 30% of their revenues through the production or use of coal.
The Insurance Australia Group (IAG) is not currently providing any insurance products to the coal sector.
Between the firms, there are no longer any Australian based insurance firms willing to do new business with the thermal coal industry.
Banks and insurance companies have come under mounting pressure to reduce their exposure to fossil projects and stop the financing of new fossil fuel projects, both from climate change campaigners, as well as investors concerned about the impacts that climate change poses to companies that are heavily involved in fossil fuel industries.
The ability to secure finance and insurance is a crucial step in the development of large-scale resources projects, helping to de-risk the project for developers, and failure to secure insurance can often cripple a project.
Campaigners have targeted Australian insurance companies to make commitments not to underwrite new fossil fuel projects, and by depriving projects of access to insurance products, campaigners can raise the potential that new fossil fuel projects may not progress at all.
Investors have also called on insurance firms to assess and disclose their level of exposure to climate-related risks, seeing investments in fossil fuels as not just a risk to the environment, but also represents a substantial risk to their investments.
“Any company wanting to run a coal-burning power station past 2030 will now be unable to get an Australian insurer to back it. AGL and Origin might want to take note,” Brait added.
“While Suncorp’s progress on thermal coal is exciting, the fossil fuel sector is far broader and without action on oil and gas, there is a risk that Suncorp ends up trading one massive climate risk for another over time.”
“The impacts of climate change pose severe risks to humanity and those risks are already showing up on the balance sheets of insurance companies. Shareholders and investors need assurance that Suncorp is doing everything possible to minimise the risks of climate change,” Brait added.
Market Forces last week lodged a shareholder resolution with AGL, calling on the company to set targets for reducing greenhouse gas emissions in line with the goals of the Paris Agreement, and would necessitate AGL bringing forward the retirement all of its coal power plants as early as 2030.
In light of the confirmation it will exit the coal industry, Market Forces will still progress the shareholder resolutions at the Suncorp AGM, believing it is crucial that Suncorp set targets to withdraw from all fossil fuel industries, including gas and oil.
