As the annual G-20 Summit begins this weekend in Hangzhou, China, a coalition of insurers has a message for the leaders of the world’s largest economies: Stop all subsidies for fossil fuels by 2020.
In an open letter sent to G-20 leaders, insurance companies and other financial institutions channeled last year’s COP21 talks in Paris to urge a quicker transition to a clean-energy, low-carbon economy. Managing an estimated $13 trillion in assets, the signatories pushed G20 countries to phase out all use of public funds for the development of oil, gas and coal.
They also put pressure on the G20 to finalize the Paris agreement, double the world’s investment in renewables by 2020 and behoove financial regulators to mandate climate-related disclosures. NGOs joined these companies in signing the letter, including CDP, the Investor Group on Climate Change and Ceres.
Three large multinational insurers -- Aviva and MS Amlin of London and Netherlands-based Aegon -- have been particularly outspoken with pushing this declaration. These companies alone manage $1.2 trillion in assets worldwide.
Aegon says such commitments to confronting climate change risks are necessary for its long-term planning and will motivate the company to increase investments in renewables. The company finances solar projects in the U.S., contributed to the launch of a $50 million wind farm in Germany and this year started a solar energy fund for institutional investors. Earlier this year, Aegon also announced that it would no longer invest in companies that generate more than 30 percent of their revenue from the sales of thermal coal. Although the company said such investments totaled a scant amount of its portfolio, it says executives wanted to minimize any exposure to what more insurers are now generally describing as “stranded assets.”
Aviva is another signatory that is appearing to walk the talk. The company claims to have made over $460 in clean energy investments, reduced its carbon emissions by almost 40 percent since 2010, and cut its employees’ air travel while using rail more to conduct company business. Renewable power also provides over 60 percent of the company’s electricity needs.
While many of the world’s largest economies are increasing their investments in renewables, subsidies for oil, gas and coal development are still the norm. The Organization for Economic Co-operation and Development (OECD) estimates that its member states pay anywhere from $160 billion to $200 billion annually for fossil fuel subsidies. That is exponentially more than what these countries spend on clean-energy research and development, and it's twice as much as the $100 billion the OECD says will meet the world’s climate finance objectives for 2020.
Other global organizations are also lighting a fire under the world’s richest countries so that they take faster action on climate change. The World Bank says climate change risks could condemn another 100 million people worldwide to a life of poverty by 2030. And the International Monetary Fund (IMF) has taken the OECD’s estimates even further, suggesting that when accounting for human health and environmental damage, fossil fuel companies are costing the world’s economy $5.3 trillion a year -- or $10 a minute.
Image credit: Peter Dowley
Leon Kaye has written for TriplePundit since 2010, and became its Executive Editor in 2018. He's based in Fresno, CA, from where he happily explores California’s stellar Central Coast and the national parks in the Sierra Nevadas. He's worked an lived in South Korea, the United Arab Emirates and Uruguay, and has traveled to over 70 countries. He's an alum of the University of Maryland, Baltimore County and the University of Southern California.