Insurance companies also play an important role in the financing structure of the value chain around hard coal. In the debate on the climate crisis they are often regarded as ‘saviours’, as they insure against financial losses caused by extreme weather events. But above all they also provide an important buffer against financial, physical, and political risks to coal companies,124 and are thus critical for the coal business.
In response to increasing public pressure, many banks, funds, and insurance companies have made commitments to limit or phase out lending, financing, and underwriting services to coal companies, and developed ‘coal guidelines’. These guidelines may exclude new loans for companies that make most of their sales from coal, and the funding of open pit extensions. But, Europe Beyond Coal criticise these guidelines as rarely ambitious enough. The French investment firm, Crédit Agricole, for instance, continues to invest over one billion euros in the eight most climate-damaging European coal companies, and has only pledged to stop coal investments in 2030 – way too late.
As the report “Fool’s Gold” by Europe Beyond Coal states: “[R]estrictive policies by European banks, investors and insurance companies have been adopted at an increasing rate. Unfortunately, the frequency of new policies does not necessarily reflect their quality. Coal policies are now commonplace but are often ridden with exceptions and tepid corporate engagement practices. The European coal utilities are, in effect, too often treated with kid gloves. Instead, deeper exclusions and appropriately forceful engagement are required”. Following the capitalist logic of ‘value creation’ and profit-making in the insurance business, investment in the creation of risk to be covered is an efficient component of the system. In order to pressure insurance companies, it is crucial to demonstrate their role, because by withdrawing or preventing insurance services for coal companies, future and existing hard coal-fired power plants and mining projects can be stopped. As we know, our best insurance is to keep fossil fuels in the ground.