May 23rd, 2015 by Stephen Hanley
AXA, one of the largest insurance companies in the world and the largest in France, announced this week that it will sell more than $550,000,000 in coal investments by the end of 2015. At the same time, it will triple its investments in renewable energy, energy infrastructure and green bond to more than $3 billion by 2020 says a report by Think Progress. Last year, AXA paid over $1 billion in weather related insurance claims. It cites climate change as a “core business issue” already driving an increase in weather-related risks.
“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.”
Paris will host a global summit on climate change in December of this year and is a world leader in addressing air pollution. It has passed a law that requires all new roofs in the city to be covered either in vegetation or solar panels. It has also taken major steps to reduce the amount of traffic in the city and promote bicycle sharing programs.
A study published in Nature in January found that limiting global warming to just 2°C will require that 80% of the world’s current coal reserves remain unused between now and 2050. AXA’s chief executive Henri de Castries says, “The facts are undeniable. If we think we can live in a world where temperatures would have increased by more than 2 degrees C, we’re just fooling ourselves.
During an interview with Boomberg Television, de Castries called climate change “an extremely large risk.” He went on to say, “Insurers are the mirror of what happens in the economy and in the society. We try to increase what we do on the prevention side.”
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. AXA is the first global financial institution to divest from investments in coal companies, according to the Financial Times.
De Castries urges other financial institutions to join the divestment movement. “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.”
As with all social changes, the coal divestment movement has started slowly. But with AXA’s commitment to divestiture of its coal company investments, the movement has gained a powerful new voice. How long will it be before American voters remove obstructionists like James Inhofe, the infamous Senator Snowball, from office and demand leaders who will lead rather than kowtow to wealthy special interests?
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