California insurers asked to divest from thermal coal

Commissioner Dave Jones cites the risk of carbon assets' declining value

California Insurance Commissioner Dave Jones has asked all insurance companies doing business in the state to divest from thermal coal, citing the risk of carbon investments losing value and leaving them without sufficient assets to cover claims.

Starting in April 2016, insurance companies will have to disclose their carbon-based investments each year, which will be made public.

“At some point, nations and states may dramatically restrict the use of carbon,” which would trigger a dramatic drop in carbon assets’ value, Jones said in a statement. “Before that happens, it is important for insurance companies and insurance regulators to understand the scope of these investments by insurance companies and to take steps to mitigate financial risks. Divestment from thermal coal in particular will help protect insurance companies from holding an investment dropping in value, and which is likely to suffer substantial additional decline in value during a transition to a reduced carbon economy.”

Jones also pointed out Allianz is decreasing its investments in fossil fuels, and Axa will remove thermal coal from its portfolio entirely.


“I do not want to sit by and then discover in the near future that insurance companies’ books are filled with stranded assets that have lost their value because of a shift away from the carbon-based economy, jeopardizing their financial stability and ability to meet their obligations, including paying claims to policyholders.”

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