The San Francisco Board of Supervisors has become what is believed to be the first U.S. municipal body to try to force insurance companies to stop insuring and investing in fossil fuels.
The board on Tuesday voted unanimously in favor of a resolution to urge the city to screen insurers for their investments in coal and tar sands – and other U.S. cities could join San Francisco if backers of the resolution have their way.
The resolution, titled “Urging Divestment by Insurance Companies From Coal and Tar Sands Industries,” was introduced by Supervisor Aaron Peskin. The resolution comes as the city prepares to host climate leaders from around the world at the Global Climate Action Summit in September.
It’s unclear which if any carriers now doing business with the city will be affected by the board’s vote. Calls to the city’s Office of Risk Management and spokespersons for the board weren’t immediately returned.
The Paris City Council earlier this year passed a similar declaration, while other cities have made efforts to stem climate change.
In New York there’s the proposed Climate and Community Protection Act, which would commit the city to being powered by 100 percent renewable energy by 2050. The act, which has passed through state Assembly, would also mandate that at least 40 percent of state energy funds are invested into vulnerable communities, as well as creating labor protections for workers in the renewable energy industry.
Passage of the San Francisco resolution has garnered relatively scant news coverage so far, instead being eclipsed by the board’s vote at Tuesday’s meeting to block stores, restaurants and bars in the city from selling plastic straws.
The Sunrise Project, a supporter of the insurer screening resolution, plans to take similar proposals to other city councils around the nation.
“We’re really going be looking, particularly at cities in California, but we’ll be looking nationally,” said Ross Hammond, senior advisor with the Sunrise Project. “We definitely have a plan to roll this out all over the United States over the next few months.”
Telling insurers how to invest doesn’t make a lot of sense, said Mark Sektnan, vice president of the Property Casualty Insurers Association of America.
“This is another example of a political agenda that disregards the fundamentals of risk management,” Sektnan said. “Policymakers should focus on insurers’ solvency and consumer protection. Insurers review investments regularly and constantly analyze the risk and quality of their portfolios to manage solvency. This analysis includes all risks, including those that may be related to climate change.”
Pressure to get insurers to stop doing business with fossil fuel concerns has mounted over the last few years from advocacy groups, as well as regulators.
California Insurance Commissioner Dave Jones has often voiced his wish that insurers divest from coal, including establishing the Climate Risk Carbon Initiative. The initiative includes information on the amount of oil, gas, coal and utilities investments held by insurance companies, and whether the insurers have divested from thermal coal, the amount of thermal coal divested and any future commitments to divest.
A number large insurers, mostly in Europe, have already began to take actions to divest.
According to the Sunrise Project, 17 large insurers have divested roughly $30 billion from coal companies since 2015. In addition, five large international insurers – Allianz, AXA, SCOR, Swiss Re and Zurich – have stopped or limited underwriting coal projects, and AXA and Swiss Re have also stopped or limited underwriting tar sands projects.
Swiss Re announced earlier this month it no longer is providing reinsurance to businesses with more than 30 percent exposure to thermal coal across all lines of business. The policy applies to existing and new thermal coal mines and power plants, and is implemented across all lines of business and Swiss Re’s global scope of operations.
Allianz says it’s further integrating ecological and social responsibility into its core business, and has been in the process of making investments of more than 5.6 billion Euros ($691 billion) in renewable energy, with a portfolio that includes 81 wind farms and seven solar farms in Europe and the U.S.
Supporters of getting the insurance industry out of fossil fuels say insurers make “dirty energy” infrastructure projects possible by insuring and investing in these projects and the companies behind them.
“They do not have the means to invest in and insure the industries that cause climate change to accelerate, which in turn increases the amount of insurance compensation that must be paid,” Hammond said.
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