Citing climate change as a major threat, one of the world’s largest insurance companies has pledged to drop its remaining investment in coal assets while tripling its investment in green technologies.
At a business and climate change conference held this week in Paris, AXA — France’s largest insurer — announced that it would sell €500 million ($559 million) in coal assets by the end of 2015, while increasing its “green investments” in things like renewable energy, green infrastructure, and green bonds to €3 billion ($3.3 billion) by 2020.
During the announcement on Friday, AXA’s chief executive Henri de Castries spoke about the threat that climate change poses to the environment, and the responsibility of insurance companies to deal with those threats. Last year, AXA paid over €1 billion ($1.1 billion) globally in weather-related insurance claims, citing climate change as a “core business issue” already driving an increase in weather-related risks.
“The facts are undeniable. If we think we can live in a world where temperatures would have increased by more than 2 degrees [Celsius] we’re just fooling ourselves,” de Castries said.
Later, in an interview with Bloomberg Television, de Castries called climate change “an extremely large risk.”
“Insurers are the mirror of what happens in the economy and in the society,” he said. “We try to increase what we do on the prevention side.”
A study published in Nature in January found that in order to limit global warming to 2°C, 80 percent of the world’s current coal reserves would need to remain unused from 2010 and 2050.
AXA’s move away from fossil fuel assets broadens support for the divestment movement, which until now has largely been lead by churches, universities, and socially conscious investment funds. According to the Financial Times, AXA is the first global financial institution to divest from investments in coal companies.
“It is our responsibility, as a long term institutional investor, to consider carbon as a risk and to accompany the global energy transition,” the company said in a press release. “Divesting from coal contributes both to de-risking our investment portfolios and to building better alignment with AXA’s corporate responsibility strategy to build a stronger, safer and more sustainable society.”
In advance of the Paris climate talks in December, de Castries urged other financial institutions to consider different metrics for measuring the value of long-term investments.
“As long as the ‘systemic risk’ of carbon is not correctly embedded into regulatory frameworks … it will always be a story of a few responsible actors doing their best within a broader financial system that is not designed for sustainability,” he said. “[We] need to launch a serious discussion on financial regulation and greater incentives to focus on long term investments.”