Munich Re, the world's largest insurer, said two years ago it would no longer invest in companies that generate at least 50 per cent of their revenues from coal-mining or thermal coal power generation but didn't rule out reinsuring them. Swiss Re took a decision not to invest in companies with more than 30 per cent thermal coal exposures in 2016.

Honour commitment

Swiss Re's move comes days after Chinese-controlled Yancoal said it would seek a dual listing in Hong Kong after Australian fund managers responded coolly to its overtures about a big capital raising to fund expansion to meet growing demand for Australian coal in Asia.

Yancoal hit back via a spokesman, saying the threshold of 30 per cent "allows them to achieve a PR goal while still retaining a client base with significant coal exposure" and that Swiss Re is "earning from coal while suggesting they shouldn't be".

"It's more interesting to consider why they haven't either dumped all coal-exposed customers or followed the lead of other insurers and set a zero target upfront. Obviously, there's still money to be made at 30 per cent."

AGL Energy's Bayswater Power Station in the Hunter Valley. Big generators that derive most of their power from coal could also be caught by the Swiss Re move if other reinsurers follow in its footsteps. Nick Moir

Swiss Re said it adopted the "thermal coal" policy to support the transition to a low-carbon economy and honour its commitment to the Paris climate change agreement, under which it "affirmed its strong commitment to the effort to limit global warming to 1.5°C-2°C above pre-industrial levels".

Edi Schmid, Swiss Re's group chief underwriting officer, says: "The implementation of the coal policy is a major step forward in ensuring that our business activities are aligned with the Paris Agreement and related national efforts. We are working with our clients to find the best solutions that enable them to adapt to a low-carbon economy."


Martijn Wilder, a climate lawyer and partner of Baker & McKenzie, said Swiss Re's decision is significant and reflects growing market trend towards evaluating the long term climate risks of such assets.

"Swiss Re are in the business of evaluating risk and managing the financial consequences of such risk and have clearly come to a view that the financial risk posed by investment in thermal coal is not viable," Mr Wilder said.

Martijn Wilder, a climate lawyer at Baker & McKenzie, said Swiss Re's decision is significant and reflects growing market trend towards evaluating the long term climate risks of such assets. James Brickwood

This week UniSuper and QSuper threw their $147 billion behind the Climate Action 100+ group of global investors dedicated to pressuring listed companies to act on the Paris agreement and disclose all plausible carbon-related risks. Two weeks ago the Australian Securities and Investments Commission said all ASX-listed companies needed to respond to this pressure.