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.
Bank of America unveiled a new global coal mining policy today committing to reduce exposure to coal mining companies across the board. Bank of America’s Andrew Plepler announced the new policy at the bank’s annual shareholder meeting this morning in Charlotte, stating, "With regard to coal, over the past several years we have been gradually and consistently reducing our credit exposure to companies focused on coal mining. Our new policy...reflects our decision to continue to reduce our credit exposure over time to the coal mining sector globally.” The policy change comes after four years of campaigning from Rainforest Action Network and other groups, and is the strongest policy of its kind to date.
“Today’s announcement from Bank of America truly represents a sea change: it acknowledges the responsibility that the financial sector bears for supporting and profiting from the fossil fuel industry and the climate chaos it has caused,” said Rainforest Action Network Climate and Energy Program Director Amanda Starbuck. “In real terms, this means the bank is turning its back on the coal mining industry and committing to energy efficiency and renewable energy.”
Syracuse University announced Tuesday that it is formally divesting endowment funds from coal mining and other fossil fuel companies.
SU will continue to seek investments through its endowment in companies that are focused on developing new technology involving solar energy, biofuels and advanced recycling, according to an SU News release.
This commitment means that SU will not “directly invest in publicly traded companies whose primary business is extraction of fossil fuels.” External investment managers at SU will also be directed to halt investments in these public companies, according to the release.
The world has much more coal, oil and gas in the ground than it can safely burn. That much is physics.
Anyone studying the question with an open mind will almost certainly come to a similar conclusion: if we and our children are to have a reasonable chance of living stable and secure lives 30 or so years from now, according to one recent study 80% of the known coal reserves will have to stay underground, along with half the gas and a third of the oil reserves.
If only science were enough.
If not science, then politics? MPs, presidents, prime ministers and members of congress are always telling us (often suggesting a surrender of civil liberties in return) that their first duty is the protection of the public.
The UN organisation in charge of global climate change negotiations is backing the fast-growing campaign persuading investors to sell off their fossil fuel assets. It said it was lending its “moral authority” to the divestment campaign because it shared the ambition to get a strong deal to tackle global warming at a crunch UN summit in Paris in December.
“We support divestment as it sends a signal to companies, especially coal companies, that the age of ‘burn what you like, when you like’ cannot continue,” said Nick Nuttall, the spokesman for the UN framework convention on climate change (UNFCCC).
Many reasons have been provided for the dramatic plunge in the price of oil to about $60 per barrel (nearly half of what it was a year ago): slowing demand due to global economic stagnation; overproduction at shale fields in the United States; the decision of the Saudis and other Middle Eastern OPEC producers to maintain output at current levels (presumably to punish higher-cost producers in the U.S. and elsewhere); and the increased value of the dollar relative to other currencies. There is, however, one reason that’s not being discussed, and yet it could be the most important of all: the complete collapse of Big Oil’s production-maximizing business model.
Now it’s time for the fossil fuel divestment movement to escalate and force our college administrators to answer that question. We’ve petitioned. We’ve met with our administrators. We’ve demonstrated our power with rallies and marches. Coming up on the four year anniversary of the first calls to divest, we are now in the same place as Harvard’s living wage campaign was in 2001, and as Columbia in 1968 and 1985. This spring, we are taking the next step to ask our administrators whose side they are on, because neutrality is no longer an option: either they will side with perpetrators of the climate crisis, or with the students, faculty, and alumni they claim to support. There is no middle ground.
Markets and governments are converging to address climate change. As scientific evidence and government actions strengthen, investors and financiers are reducing the exposure of their portfolios to risks from rising greenhouse-gas emissions. They are allocating more capital to low-carbon activities and less to carbon-intensive industries.
In September 2014, banks, insurance companies, charities, and pension, mutual and endowment funds announced that they would direct an extra US$125 billion per year until 2020 to investments that address climate change. Fossil fuels are being divested from by influential funds, including the Rockefeller Brothers Fund of New York, and universities in the United States, the United Kingdom and Australia.
For a week this April, a number of Harvard alumni will return to campus to support the undergraduate fossil fuel divestment movement, and to voice our own support for a change in Harvard's investment policy. Last Friday, a number of alumni released the following letter to call for action at Harvard:
Dear fellow Harvardians,
We write in hopes that you might come to Cambridge for a couple of days this spring to join in the fight against global warming--in particular, to help students press our alma mater to divest its stock in the fossil fuel industry.
The Independent Petroleum Association of America recently commissioned and funded a study, covered in the New York Times and elsewhere, which claimed that university endowments would suffer without fossil fuels in their portfolios. The Wall Street Journal ran an op-ed calling fossil fuel divestment a "Feel-Good Folly."
Let's look at the facts. The global indexing firm FTSE has developed several fossil fuel free indices, and has tracked performance over the past five years. Over this time period, FTSE's North American fossil fuel free index has consistently outperformed the conventional benchmark index.