“Climate change generates enormous economic and social risks. It is already harming millions of people today,” explains the CEO of Allianz SE, Oliver Bäte. “As a leading insurer and investor, we want to promote the transition to a climate-friendly economy.”
In 2015, the worldwide community of states agreed to limit global warming to below two degrees Celsius to avoid serious risks associated with climate change. Allianz is also supporting this long-term transformation by financing renewable energies and is a worldwide leader in providing specialty insurance for renewable energy production plants.
For the investment of the premiums of its insurance customers, Allianz defines one of its long-term objectives as structuring its tradable investments in all carbon intensive sectors to be climate-neutral. Companies that do not succeed in adjusting their greenhouse gas emissions to the two-degree target over the coming decades will be gradually removed from the portfolio. This will be implemented for example by active dialogue with the companies and by requests for long-term climate protection targets, similar to the ESG scoring approach, which is already applied to companies with high ESG risks.
“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,” explains Dr. Günther Thallinger, member of the Board of Management of Allianz SE and responsible for investments and ESG. “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.”
Additionally, the threshold value in the energy sector for the maximum share of coal used by the emitters that Allianz finances will be successively lowered in five percent steps from currently thirty percent to zero by 2040. The threshold relates to the revenue that is generated by a mining company by mining coal or to the percentage of electricity generated from coal by energy companies. The next adjustment will take place within the next five years. With immediate effect, Allianz will no longer invest in energy companies that put the two-degree target at risk by extensively building coal-fired power plants.
In Property and Casualty insurance, with immediate effect, Allianz will no longer provide insurance to single coal-fired power plants or coal mines, that are operational or planned. Companies that generate electricity from multiple sources, such as coal, other fossil fuels or renewable energies, will continue to be insured, and individually reviewed on the basis of defined ESG criteria. However, Allianz’s stated goal is to completely phase out coal risks in the insurance business by 2040.
“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,” says Chris Fischer Hirs, CEO of Allianz Global Corporate and Specialty, the global industrial insurer of the Allianz Group, which will implement the new guidelines as one of many Allianz entities worldwide.