Japanese insurance giant Sompo has announced a policy on coal that could herald the beginning of a shift away from coal power underwriting in the East Asian country.
Sompo said in a statement on Wednesday (23 September) that it would no longer insure and invest in new coal-fired power stations in Japan, although it would continue to back those it is currently involved in.
The policy, effective from December, does not prevent Sompo from insuring coal projects in other countries.
The news was welcomed as a positive first step by green groups, although the Japan Center for a Sustainable Environment and Society pointed out that Sompo is still in the running to underwrite Vung Ang 2, one of the region’s most controversial coal projects, in Vietnam.
The policy is also not strong enough to meet Paris climate accord commitments on emissions reductions.
Sompo’s announcement will provide impetus for its main competitors, Tokio Marine and MS&AD, to publish coal policies of their own, sources have suggested.
Tokio Marine, one of the world largest coal insurers, has a range of sustainability commitments in place, including introducing climate targets under the Science-Based Targets Initiative (SBTI). One of the conditions of the initiative, which will come into force next week, on 1 October, is that financial institutions should publicly disclose a policy on coal and declare when they will stop investing in coal projects.
MS&AD has also committed to introduce climate targets under the SBTI.
Neither Tokio Marine nor MS&AD have responded to Eco-Business’s requests for comment about coal policies.
Japan’s insurance giants have largely resisted a global trend away from coal power underwriting. Tokio Marine, Sompo and MS&AD ranked poorly in an assessment of the world’s top 30 insurance firms by the Unfriend Coal campaign last year, all three scoring zero for coal divestment.
Meanwhile, the number of insurers withdrawing cover for coal projects more than doubled in 2019, according to Unfriend Coal campaign data. Asia is the only major region left for coal insurance, and Japan is the region’s biggest coal insurer.
Coal projects are becoming increasingly uninsurable. As global temperatures rise, extreme weather is becoming more common, leading to higher climate-related claims for insurers.
In 2019, climate change contributed to 15 events that cost more than US$1 billion in damage, with over half of those costing more than US$10 billion. Between 2017 and 2018, total losses from natural disasters amounted to $510 billion, compared to just $41 billion for the previous 30 years, according to insurer Munich Re.