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Major insurers tell campaign they will not be backing large Australian coal mine

A group aggressively working across the globe to push insurance companies away from the coal sector said some of the world's largest insurers will not be covering Adani Mining Pty. Ltd.'s controversial Carmichael coal mine in Australia.

Ten of the world's top insurance companies have explicitly refused to insure the mine or had pledged not to provide cover for new coal projects, the Unfriend Coal campaign announced Dec. 19. The revelation followed the Adani Enterprises Ltd. unit's recent announcement that the company would be self-financing the project after revising its mining plan to simplify construction and reduce the initial capital requirements for the mine and associated infrastructure.

"If insurance companies are serious about combatting climate change and aligning their business with the Paris climate agreement, this is an important test case for them," said Peter Bosshard, director of the finance program for The Sunrise Project and a coordinator of the Unfriend Coal campaign. "There's a large enough number of insurers who haven't committed one way or the other, so it's not impossible [the Carmichael mine project] can go further, but I think there's a decent chance they can't get insurance for the project. They didn't manage to secure finance because I think everybody realizes this is a really toxic project."

Adani is "continuing to get on with creating jobs and the economic benefits" associated with the Carmichael mine and rail project, the company said in a Dec. 20 statement responding to the insurance campaign. The company said claims that the Carmichael mine would be catastrophic to efforts against climate change are false because the amount of coal the proposed mine would produce is only 27.5 million tonnes of coal per year, or roughly a half-percent of world thermal coal demand in 2017.

"The fact is that coal underpins the high quality of life we enjoy in Australia," Adani wrote in its statement. "This Christmas Australians will be cooking their Christmas feasts, cooling their drinks and turning on their Christmas lights using electricity, three-quarters of which will be generated by coal."

The company did not say whether it had secured insurance but said its insurance arrangements were considered "commercial-in-confidence."

The list of insurance companies includes what the campaign said was the first major U.S. insurer to take action on coal, Factory Mutual Insurance Co. One company, London-based Beazley Group Ltd. told the campaign that it has no direct involvement with the project, "having declined the risk when it was presented earlier this year."

"We are very aware of the impact of climate change," Beazley CEO Andrew Horton wrote to Bosshard in a letter that Unfriend Coal later provided. "You will be aware from our recent press releases that we have been working hard to support clients affected by the natural catastrophes that have occurred during 2018, such as hurricanes, typhoons and wildfires, with the aim of helping our clients return to pre-catastrophe conditions as soon as possible."

Similarly, Australia-based QBE Insurance Group Ltd.'s chief risk officer, Peter Grewal, responded to the campaign with a letter, saying that while the insurer will not discuss specific customer relationships, it can confirm that it does not provide services to the proposed Carmichael project and will not do so in the future.

"At QBE, we believe climate change is a significant risk for the world, for our industry and for our business," Grewal wrote in the letter the campaign later provided. "As well as the physical risks and opportunities associated with climate change, we are cognizant of the potential transition risks associated with the global shift towards a lower-carbon economy consistent with the 2015 Paris Agreement."

More than 37 global financial institutions, including all of Australia's major banks, had publicly turned down involvement with the $1.5 billion project, the campaign said in its announcement. Still, Adani recently said it would immediately begin to work on developing the mine and is working with regulators to finalize hurdles to breaking ground on the project.

On Dec. 6, the campaign said, 73 organizations representing a membership of over 76 million people sent an open letter to 30 leading insurers calling on them to publicly rule out insuring the mine and rail project due to climate, environmental and social impacts. By Dec. 14, five companies had explicitly pledged not to provide insurance and five had existing policies that exclude insuring the mine. While four insurers said they would not commit to not insuring the project, three of those noted they were not currently involved with the project.

"We've made it clear to the insurers that have failed to respond by the deadlines that they can consider themselves the subject of public campaigns until we get the response that we need," said Julien Vincent, executive director of Market Forces, one of the organizations behind the effort. "We need to be phasing out of the fossil fuel sector, not expanding it."