Activists say move means there are now no Australian insurers willing to underwrite new thermal coal developments

This article is more than 1 year old

This article is more than 1 year old

Australian insurance giant Suncorp will no longer invest in, finance or insure new thermal coal mines and power plants, and will not underwrite any existing thermal coal projects after 2025.

This is the latest in a series of pledges by banks and financial services companies that they will not support projects that mine or burn coal used for electricity generation, in line with the goals of the 2015 Paris climate agreement.

Activists said Suncorp’s announcement meant there were now no Australian insurers willing to underwrite new thermal coal developments.

Suncorp, which owns insurance brands AAMI and GIO, made headlines in February when it announced its half-year profit had slumped 45%, mainly because of extreme weather events in Sydney and Queensland.

Its then chief executive, Michael Cameron, called on the government to make it compulsory for Australian businesses to adopt climate change action plans to prepare for natural disasters.

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In a statement on Friday, the $17bn company said climate change posed a financial and strategic risk but was also an opportunity. It said it had applied a shadow carbon price, assuming greenhouse gas emissions have a cost, to its investment decisions since 2017 and had recently expanded that across all its operations.

“The practical outcome of this is that we have materially reduced our investment in fossil fuels, including thermal coal,” an official said. “We will seek to increase exposure to businesses that have a positive environmental impact, including renewable energy generation and technology.”

Suncorp’s competitor QBE said in March it would no longer insure new thermal coal projects and would stop underwriting existing operations from 2030.

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Market Forces, an activist group affiliated with Friends of the Earth, lodged a shareholder resolution this week asking Suncorp to set targets for phasing out all fossil fuels, including coal, oil and gas. Campaigner Pablo Brait said the company’s announcement was significant.

“Any company wanting to run a coal-burning power station past 2030 will now be unable to get an Australian insurer to back it. [Energy companies] AGL and Origin might want to take note,” he said.

Brait called on Suncorp to go further. “Without action on oil and gas there is a risk that Suncorp ends up trading one massive climate risk for another over time,” he said.

Suncorp said in February its experience with extreme events had prompted it to increase its annual allowance for natural hazards by $100m and to buy another $200m of reinsurance cover.

Market Forces said claims to Suncorp for flood, fire and cyclone damage had been $1.7bn more than the group had budgeted for over the past decade.