TOKYO • Nippon Life Insurance will no longer extend loans for, or invest in, coal-fired power plants due to environmental concerns, an official at Japan's biggest life insurer said, in the first such move by a major Japanese institutional investor.

Japanese banks have tightened lending criteria for coal power, indicating a global divestment of fossil fuel assets that has cut US$6 trillion (S$8.2 trillion) worth of investment.

"We have decided to stop new investment and lending to coal-fired power projects at home and overseas," Mr Yusuke Takaishi, deputy general manager at Nippon Life's finance and investment planning department, told Reuters.

Exceptions would be where a power station employs technology that captures the environmentally harmful carbon dioxide emitted by burning coal and stores it underground, an expensive option used in only a few locations worldwide.

Nippon Life has assets of over 74 trillion yen (S$907.5 billion), so its action may influence other Japanese investors, analysts said.

Burning coal to generate power produces large quantities of greenhouse gases responsible for climate change, which causes flooding, droughts, storms and heat waves, as average global temperatures soar, melting Arctic ice and raising sea levels.

"There are discussions among institutional investors, mainly those in Europe and the US, on how to deal with the issue of climate change and we are part of those discussions," Mr Takaishi said.

"Our decision on coal power is just one result of our ongoing discussions on climate change and we are not just considering coal," he said, without elaborating. He declined to disclose how much Nippon Life had invested in coal.

Anti-fossil fuel campaign group 350.org calculates Nippon Life advanced US$82 million in loans to domestic coal plant builders from 2011 through 2016.

In 2011, a nuclear meltdown prompted the closure of all nuclear power plants and increased emphasis on fossil fuels.

The insurer also has US$1.3 billion invested in bonds and shares of coal plant builders, according to research commissioned by urgewald, a German non-profit organisation that campaigns against environmental destruction. The coal plant builders include utilities such as Tokyo Electric Power Co and trading houses such as Marubeni Corp.

Japan is one of the few industrialised countries that heavily promote coal power both at home and abroad, including technology to reduce carbon dioxide emissions. Its banks are among the biggest financiers of coal-related projects globally, but that may be changing.

Sumitomo Mitsui Trust Bank told Reuters it would stop providing project finance for new coal-fired power stations "as a basic rule". Exceptions would be evaluated "cautiously", it said.

Sumitomo Mitsui Financial Group, Japan's third-biggest bank by assets, said in May it would tighten criteria on lending for coal power.

REUTERS