Axa to ditch €500m of coal holdings in 2015

At Climate Week Paris, French insurer announces biggest fossil fuel divestment push to date, encouraging others to follow

Coal is the most carbon intensive fossil fuel (Pic: Takver/Flickr)

Coal is the most carbon intensive fossil fuel (Pic: Takver/Flickr)

By Megan Darby

French insurance group Axa has pledged to sell €500 million of coal assets before 2016, citing climate concerns.

The biggest institutional investor to shun coal stocks, Axa also plans to sink €3 billion into low carbon sectors by 2020.

Henri de Castries, the company’s chief executive, revealed the move at Climate Week Paris and encouraged others to follow.

“The facts are undeniable. If we think we can live in a world where temperatures would have increased by more than 2C we’re just fooling ourselves,” he said.

On the insurance side of the business, he said increasingly intense and frequent extreme weather saw AXA pay out more than €1 billion on weather-related insurance claims last year.

“Climate risk for us is neither an ideological or theoretical issue: it is a core business issue, as we are already seeing the impact of increasing weather-related disaster risks.”

Scientists estimate more than 80% of the world’s proven coal reserves must stay in the ground to limit global warming to 2C.

That is the agreed goal for international negotiations to slash greenhouse gas emissions, with countries aiming to strike a deal this December.

The Dirty Dozen: the fossil fuel industry’s polluting league table

Earlier in the week, oil and coal bosses in Paris showed their support for a global climate pact. But at the same time, they rejected the idea some of their fuel would have to go unburned.

Axa’s move adds financial clout to the growing fossil fuel divestment movement, which has seen cities, universities and charities pull finance from polluting sectors.

Oxford University on Monday committed not to fund exploitation of coal or tar sands.

Most of the funds involved have been small, expecting to stigmatise dirty energy producers rather than bankrupt them.

Meanwhile, financial institutions have preferred to engage with fossil fuel companies, encouraging them to ditch the highest carbon projects.

Major investors recently got Shell and BP to commit to testing their business plans’ viability in a 2C future – something oil producers have so far refused to do.

If governments succeed in curbing emissions, they argued, that will cut demand for oil and depress the oil price, affecting shareholder value.

But de Castries told the Financial Times he thought other big investors would join Axa in quitting coal altogether.

Norway's Parliament will vote on coal divestment rules for the state pension fund on 5 June (Pic: Michael Spiller/Flickr)

Norway’s Parliament will vote on coal divestment rules for the state pension fund on 5 June (Pic: Michael Spiller/Flickr)

Calls are mounting on Norway’s €900 billion state pension fund to withdraw from the coal sector, ahead of a parliamentary vote on 5 June.

It is the most carbon intensive fuel, NGOs Greenpeace, Future in our hands and urgewald noted in a report. Investments in coal are “a sure-fire recipe for accelerating climate change”.

The pension fund shed stakes in 49 companies in the past year over sustainability concerns. But the green groups found some of the cash had been transferred from mining to coal power.

“Our country’s money should not be used to bury our own and everyone else’s future under a mountain of coal,” said Arild Hermstad of Future in our hands.

The Institute for Energy Economics and Financial Analysis argued divestment made financial as well as moral sense.

The Stowe Global Coal Index lost 71% of its value over the past five years and demand growth from China has not been as rapid as expected.

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