A new policy from Hartford Financial Services Group Inc. excluding companies generating more than a quarter of their revenues from thermal coal mining or more than 25% of their energy production from coal adds further pressure to an industry seeing its options for financial services shrink rapidly.
The Hartford also said it will not underwrite or invest in the construction of new coal-fired power plants and will limit its association with the tar sands oil sector. It will also work to phase out existing underwriting relationships and divest publicly traded investments exceeding the new threshold by 2023, according to a Dec. 20 news release.
"Extreme weather affects people's lives and businesses — and the risks are getting worse. As an insurer and asset manager we recognize the growing cost of this crisis, and we're determined to use our resources and influence to address the challenge. That's why we have taken a position on coal and tar sands," The Hartford's Chairman and CEO Christopher Swift said in the statement.
European insurers and banks were among the first institutions to begin excluding coal, but activists recently turned their attention to the United States. The Hartford, a Connecticut-based company, joins a growing list of U.S.-based companies participating in the trend.
"The Hartford's policy is the fourth from a major U.S. insurer in six months, demonstrating the insurance industry's shift away from fossil fuels including coal and tar sands is accelerating," said Mary Sweeters, a campaigner with Insure Our Future, an organization aimed at getting insurance companies to divest from the coal sector.
The Hartford is a top 10 U.S. commercial property and casualty insurer with approximately $3.3 billion invested in fossil fuels, including more than $667 million in thermal coal, according to a Rainforest Action Network news release. About 18 global insurers have restricted or eliminated insurance coverage for and investments in coal, according to the Rainforest Action Network.
"In the face of the climate crisis, The Hartford joins a growing movement of insurers taking action to keep coal and tar sands in the ground and accelerate the transition to a low-carbon energy future. The Hartford's new policy comes on the heels of Liberty Mutual Group's much weaker coal-only policy announcement last week," said Elana Sulakshana, an energy finance campaigner for Rainforest Action Network.
Coal companies, and the rest of the fossil fuel sector, are doing business under the looming threat of a "global tipping point" as capital flows to renewable energy, Tim Buckley, director of energy finance studies at the Institute for Energy Economics and Financial Analysis, or IEEFA, wrote in a recent report.
"The largest listed fossil fuel companies still toying with thermal coal and coking coal, and even oil and gas, have been massively down-rated, and shareholder wealth destruction has been staggering, in absolute terms and relative to the overall market rise," Buckley wrote. "With global capital fleeing thermal coal and coal-fired power generation — the largest, most dirty, most emissions intensive sector, IEEFA suggests financial markets are not waiting to see if Paris [climate agreement] targets might be met."