by Lieve Lowet
This is the second part in a series of three articles written by me, which focuses on coal, climate change and capital.
The recent findings of the Coal Policy Tool of Reclaim Finance reveal that indeed, as Sweeney said, managing climate-related risk remains a novel process for many. If insurers and reinsurers want to be part of the solution, more serious action is required beyond divestments and a few pioneers. If a sector is not insurable, it is not bankable. And if it is not bankable, most coal projects cannot be financed and built. The Indian Adani Group’s Carmichael Australian coal mine controversy is a warning. Whereas the European insurers and reinsurers are roughly and broadly speaking ahead of their American, Korean or Japanese counterpart across the five criteria Reclaim Finance examined in underwriting, and the best practice case is a large European insurer, there is still a lot of work to be done by insurers and reinsurers alike to reduce capacity meaningfully and to avoid the liability risk. Continue reading…