Last week the Chubb Group announced that it would no longer provide insurance coverage for coal companies. It would not underwrite construction of new coal-fired plants, nor provide coverage for companies that generate 30% of their revenue from coal mining or production.
The Chubb Group, the world’s largest publicly traded property/casualty insurer, also announced that it would drop existing clients that fail to meet those benchmarks by 2022.
European insurers such as Swiss Re, Axa, Zurich and Allianz have already announced plans to cancel business with coal companies.
Industries that are not in the coal business may believe they’re exempt from such decisions. Today, however, any company that is perceived to be contributing to climate change will endure a “scarlet letter” – regardless of the truth of the accusation.
In the recent televised Democratic debates, consider one of candidate John Hickenlooper’s comments on global climate change:
“If you look at real problems, CO2, the worst polluters were China, followed by the United States, and then it’s concrete and its exhalation . . .”
Although improvements continue, coal has become a much cleaner industry in recent years, but that argument is worthless in the narrative of some western countries. How steel, or even wind turbines, can continue to be produced without coal remains unanswered.
Certainly, companies and industries under this threat should adopt new technologies that reduce their footprint. But that is not enough. The hue of the “scarlet letter” will continue to glow without an equally determined effort to constantly and consistently communicate to every constituency such significant steps and progress. Policies on global climate change bring new risks, and increasingly the social license to operate is a pivotal issue.