Reinsurer to introduce new thermal coal exposure thresholds in 2023
Swiss Re to fully phase out coal from its treaty business by 2040. (Credit: hangela from Pixabay)
Swiss Re has announced that it will fully phase out reinsurance of the thermal coal industry by 2040, as part of its efforts to support the transition to a net-zero economy.
In 2023, the Swiss company will introduce new thermal coal exposure thresholds for tightening its coal policy. The thresholds will apply for treaty reinsurance across the company’s property, casualty, engineering, marine cargo, and credit and surety lines of business.
The reinsurance company said that the thresholds will be gradually lowered and will result in a total phase out of thermal coal exposure in Organisation for Economic Co-operation and Development (OECD) nations by 2030 and in other parts of the world by 2040.
Swiss Re has a set a target of 2050 for transitioning its investment portfolio to net-zero greenhouse gas emissions. The company will initially aim towards reaching a carbon reduction target of 35% for its investment portfolio by 2025.
Swiss Re Group CEO Christian Mumenthaler said: “Climate change remains the biggest challenge we face as a society. The stakes are high and require immediate attention.
“Signing up to net-zero emissions by 2050 and setting concrete climate targets are important first steps.
“What needs to follow now is action. We are moving ahead in all areas of our business to accelerate the transition towards net zero.”
The company had established its thermal coal policy in 2018. It was seen as a first step taken by the company towards a comprehensive carbon steering mechanism, aimed at transitioning its reinsurance business to net-zero emissions by the year 2050.
In 2018, the company said that it would not provide reinsurance to businesses having thermal coal exposure of more than 30%.
Swiss Re’s coal policy is part of its Sustainable Business Risk Framework that had been in place since 2009.
According to the activist network Insure Our Future, firms controlling 56% of the reinsurance market have implemented coal restrictions for their facultative business.
The activist network said that Swiss Re is the first reinsurer to have announced the withdrawal of coal from its treaty business.
Insure Our Future European coordinator Lindsay Keenan said: “We welcome Swiss Re’s commitment to a full phase out of thermal coal from its treaty reinsurance and call on all other reinsurance companies to do the same.
“Treaty business is a very large portion of the reinsurance trade and it has been a major loophole in coal underwriting that needs to be addressed. Swiss Re has set a benchmark that the rest of the industry needs to follow, now.”