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AXA throws weight behind 0% coal energy world

27th November 2019 - Author: Charlie Wood

Global insurer AXA has laid down a series of targets designed to accelerate its contribution to the transition towards a low-carbon economy.

axa-logoThe enhanced strategy, due to be announced tomorrow at an event organised in collaboration with the United Nations Principles for Sustainable Insurance (UN PSI), includes doubling its green investment objective to €24 billion by 2023.

AXA believes this increased investment will help contain the warming potential of its investments under 1.5°C by 2050.

The company will also invest in ‘transition bonds’, an asset class conceptualised by AXA IM aimed at helping companies shift towards less carbon intensive business models.

“Today we are launching a new phase in our climate strategy to accelerate our contribution to the transition towards a low-carbon and resilient economy, notably by focusing our sustainable finance efforts towards the energy transition of major industries. We are convinced that it is an absolute priority if we want to reach the objectives of the Paris Agreement,” said Thomas Buberl, Chief Executive Officer of AXA.

In an effort to move towards a 0% coal energy world, AXA plans on reinforcing its divestment policy to completely exit the coal industry by 2030 in the OECD region and 2040 in the rest of the world.

In the shorter term, existing investment thresholds will be strengthened, with a particular focus on companies developing new coal capacities.

As an insurer, AXA will look to ban any insurance business (except employee benefits) with clients developing new coal projects that exceed 300 MW in capacity, as well as further restrict underwriting services with coal-related businesses.

“AXA has been a pioneer by setting up an ambitious climate change strategy, notably by starting to divest from coal, defining green investment targets, restricting coal-related insurance business and building collective action frameworks,” added Buberl.

“These actions helped our industry to put climate change at the top of our collective agenda.”

AXA intends to leverage its climate expertise and innovative technologies to provide new protection services to its customers and society.

Through AXA Climate, the group will launch a new parametric assistance service in December.

Titled FastCat, the service will reportedly offer weather alerting and 24/7 real-time assessment through satellite imagery and drones, to support communities and corporations facing natural disasters such as flood, earthquake, cyclones and wildfires.

Finally, AXA says it will facilitate cooperation between all stakeholders to drive collective action.

Consequently, the insurer has launched a coalition of institutional investors committed to transition their investments to “net-zero” greenhouse gas emissions by 2050 in order to align their portfolios with a 1.5°C scenario.

AXA is also joining forces with the C40 network, a coalition of the biggest cities gathering 1 out of 12 inhabitants in the world, in the hope of making metropolitan areas more resilient to natural catastrophes.

Reinsurance News met recently with AXA XL’s Andrew MacFarlane, Managing Director and Head of Pricing & Analytics for London & Bermuda, Reinsurance.

The discussion focused on the ongoing development of the world’s first Ocean Risk Index, designed to assess, transfer and trade the risks associated with the change and deterioration in our oceans, while simultaneously supporting resilience.

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