Allianz Group has significantly expanded its climate strategy with plans to immediately withdraw from re/insuring coal-based power plants and mines, and long-term goals to phase out its investments in coal-based business and re/insurance coverage of related risks by 2040.
The Group also plans to support the long-term development of a low-carbon economy by joining the Science Based Target Initiative (SBTI), which will help it integrate the two-degree target of the Paris Climate Agreement into its business activities.
The two-degree target is an agreement made by a worldwide community of states in 2015 to take steps to limit global warming to below two degrees Celsius to avoid serious climate-change risks.
These plans build on Allianz’s established Environment-Social-Governance (ESG) approach, which scores the environmental impact of companies based on a set of defined criteria.
Additionally, the company will support the transformation to a low-carbon economy by financing renewable energies and providing further specialty re/insurance products for renewable energy production plans.
Oliver Bäte, Chief Executive Officer (CEO) of Allianz SE, said: “Climate change generates enormous economic and social risks. It is already harming millions of people today. As a leading insurer and investor, we want to promote the transition to a climate-friendly economy.”
The Group also aims to eventually restructure its tradable investments in all climate-intensive sectors to be carbon-neutral by gradually removing companies from its portfolio that do not adjust to the two-degree target
Allianz, which currently allows the emitters that it finances in the energy sector to generate up to 30% of their revenue from coal, will reduce this threshold successively by 5% until it is phased out by 2040, and will immediately cease investments in energy companies that compromise climate goals by extensively building coal-fired power plants.
Günther Thallinger, member of the Board of Management of Allianz SE, said: “We are convinced that our approach will further improve the risk/return profile of our portfolio in the long term, and that we will strengthen our position as a forward-looking investor.
“As a long-term investor, we want to shape the change to a climate-friendly economy together with our clients. We will thus also strategically develop our investment opportunities in new technologies.”
While Allianz will cease its provision of re/insurance to single coal-fired power plants and coal mines with immediate effect, it will continue to cover companies that generate electricity from multiple sources until it ultimately phases out all coal risks by 2040.
Chris Fischer Hirs, CEO of Allianz Global Corporate and Specialty, added: “We will actively inform our clients about the short-term implications and long-term strategic changes. We will work together closely with them to find suitable solutions that enable a joint path towards a low-carbon economy.”