Swiss Re took a step forward this week in its commitment to manage carbon-related sustainability risks and support the transition to a low-carbon economy.

As of Monday, the Zurich-based firm no longer provides insurance or reinsurance to businesses with more than 30 percent exposure to thermal coal.

The thermal coal policy announced in June 2017 was based on Swiss Re’s pledge to adopt the principles of the Paris climate agreement in 2015, which seeks to keep global warming under 2 degrees Celsius.

As part of that commitment, “Swiss Re supports a progressive and structured shift away from fossil fuels,” according to a company statement.

The thermal coal policy applies to both new and existing thermal coal mines and power plants, and is implemented across all lines of business and Swiss Re’s global scope of operations. The policy is an integral part of Swiss Re’s Sustainability Risk Framework, which the reinsurer uses for all underwriting and investment activities.

“It has been our goal to develop a comprehensive approach to coal underwriting,” said Patrick Raaflaub, Swiss Re’s group chief risk officer. “This has been a complex task and I am very pleased that we are now in a position to start rolling out our thermal coal policy.”

The 30 percent threshold on Swiss Re’s insurance practice is in line with the threshold on the firm’s investment practice. As of 2016, Swiss Re stopped investing in companies that generate 30 percent or more of their revenues from thermal coal mining or that use at least 30 percent thermal coal for power generation. The reinsurer also divested from existing holdings.

These measures are designed to contribute to a low-carbon environment and to actively mitigate the risk of stranded assets, according to Swiss Re.

California Insurance Commissioner Dave Jones focused on the issue of stranded assets in his 2016 Climate Risk Carbon Initiative, which requires insurers with $100 million in annual premiums doing business in California to disclose investments in fossil fuels and asks all insurers operating the state to divest from thermal coal.

Earlier this year, Jones became the first U.S. financial regulator to complete a climate-related financial risk stress test for the insurance sector. The analysis underscored that thermal coal presents long-term financial risks for investors, “despite any short-term fluctuations in market price and policy signals.”

U.S. coal-fired power plants are already retiring at a rapid pace. According to Jones’ office, financial analysts expect more coal-fired capacity retirement in 2018 than under the first three years of the previous U.S. administration.

The risk to insurance companies is that fossil fuels become stranded assets on their books, with little or no value, as governments and markets reduce the demand for carbon-based fuels.

Swiss Re isn’t the only insurance firm to restrict its participation in the coal sector in recent months. In May, Germany’s Allianz stopped insuring single coal-fired power plants and coal mines, in response to criticism from environmental groups. Dai-ichi Life Insurance recently became the first Japanese institution to stop financing coal-fired power plants overseas, and Nippon Life Insurance is considering limits on coal plant financing.

In addition to shifting away from coal, Swiss Re underscored its support this week for sustainable energy projects, including insurance coverages and investments in renewable energy sources.

Swiss Re helped to develop an international guideline on risk management and sustainability of solar panel warranty insurance, known as the Solar Panel Code of Practice. It has also invested in a new product with KWh Analytics, dubbed the Solar Revenue Put, which drives down investment risk by guaranteeing solar project performance, making these projects cheaper to finance.