French Insurer Axa Divesting From Dirty Coal

The divestment movement has urged investors to move away from fossil fuel investments. That movement just gained a big victory. The French insurer, Axa, one of the largest insurance companies on the planet, announced that it will sell $559 million of its coal investments.

Axa is divesting “from the companies most exposed to coal-related activities for the assets managed internally,” Henri de Castries, chairman and CEO of Axa, said in a blog post. There is one big reason why Axa is divesting from coal, and that reason is climate change. De Castries pointed out that the last 30 years “have been the warmest period of the last 1,400 years in the Northern Hemisphere and each of the last three decades has been successively warmer at the Earth’s surface than any preceding decade since 1850.”

In other words, the planet is heating up, and weather-related events are increasing. Axa has paid out over $1 billion in weather-related insurance claims. As a result, climate risk is a “core business issue” for the insurance company.

Coal is the dirtiest fossil fuel

Why is Axa divesting from coal, as opposed to other fossil fuels? Coal is really dirty. It has the highest carbon content among fossil fuels. In the U.S. alone, carbon emissions from coal totaled 24.5 percent of greenhouse gas emissions in 2012, according to the Center for Climate and Energy Solutions. Coal is also one of the most widely distributed energy resources. There are recoverable coal reserves in almost 70 countries. Coal supplies 29.7 percent of global energy use and accounts for 44 percent of global carbon emissions.

Axa has also signed the “Montreal Pledge” to both assess and disclose the carbon intensity of its investments by December 2015. However, the company is not just divesting from dirty coal, but is also investing in clean renewables and technology. The global insurer has committed over $3 billion to triple its “green investment footprint” by 2020.

Dealing with climate change beyond divest-invest

Axa is being very proactive about climate change, beyond divesting in coal and investing in renewables, in both developed and developing countries. In developed countries, Axa offers extreme weather early-warning systems and prevention services to its customers. It has also developed more than $69 million worth of insurance for renewable energy, which helps “enable this market to develop to its full potential,” said de Castries.

In developing countries, Axa developed a partnership with the World Bank to expand what it calls parametric insurance solutions, or innovative climate index insurance. It has also expanded its investments and partnerships with key players like Leapfrog and Microinsure. This month, Axa joined the African Risk Capacity Initiative, described as a regional insurance pooling mechanism that helps African Union member states anticipate extreme weather events. Nine countries are expected to be covered by the initiative in 2015, with the goal of increasing the amount to over 20 in the next four years.