The thermal coal policy applies to bothexisting and new thermal coal mines, power plants, and isimplemented across all lines of business and Swiss Re's globalscope of operations. (Photo: Shutterstock)

Swiss Re has begun the implementation of its thermal coalpolicy, a little over a year after the announcement was first madein July 2017. Under the policy, Swiss Re will not provideinsurance/reinsurance to businesses with more than 30% exposureto thermal coal across all lines ofbusiness.

The thermal coal policy applies to both existing and new thermalcoal mines and power plants, and it is being implemented across alllines of business and Swiss Re's global scope of operations.

The decision to develop a thermal coal policy was basedon Swiss Re's commitment to the "Paris Pledge for Action" in2015 when Swiss Re affirmed its strong commitment to theeffort to limit global warming to 1.5°C – 2°C above pre-industriallevels. As a result, Swiss Re supports a progressive and structured shiftaway from fossil fuels, the company said in its announcement of thepolicy implementation.

Related: Global insured losses from disasters in 2017 werehighest ever, Swiss Re finds

A framework for sustainability

The 30% thresholdapplied falls in line with the thresholds used in makinginvestments for the company. Swiss Re had stoppedinvesting in companies that generate 30% or more of their revenuesfrom thermal coal mining or that use at least 30% thermal coal forpower generation by the beginning of 2016, as well as divestingfrom existing holdings, as a means to contribute to a low-carbonenvironment and actively mitigate the risk of "stranded"assets.

Furthermore, the company said,Swiss Re consistently integrates Environmental,Social, and Governance (ESG) criteria in its investmentprocess. It was among the first re/insurancecompanies to switch to ESG benchmarks for its actively managedequities and credit portfolios.

In the U.S., the California Department of Insurance, led byCommissioner Dave Jones, launched the Climate Risk Carbon Initiative in2016. It requires insurance companies doing businessin California to divest from thermal coal and to publiclydisclose their holdings in oil, gas,coal and utilities, due to potentialclimate-related risks.

A brighter day awaits

To further its commitment to limit global warming, Incooperation with solar photovoltaic researchinstitutions, Swiss Re developed aninternational guideline on risk management and sustainability ofsolar panel warranty insurance, the so-called SolarPanel Code of Practice (SPCoP). Swiss Re states that it willhelp all involved parties — including producers, buyers, investors,banks and insurers — to assess the long-term quality andreliability of solar panels and provide them with a best practicerisk management framework to mitigate losses.

Swiss Re is alsoencouraging the use of solar energy through itscommercial insurancearm, Swiss Re Corporate Solutions. Ithas invested in a new product, the Solar Revenue Put, whichpromotes the development of solar energy by driving down investmentrisk and making solar energy projects cheaper to finance.

"The implementation of the coal policy is a major step forwardin ensuring that our business activities are aligned with the ParisAgreement and related national efforts. We are working with ourclients to find the best solutions that enable them to adapt to alow-carbon economy," Edi Schmid, Swiss Re'sgroup chief underwriting officer, said in astatement.

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