Top US$5 trillion investor group pushes firms to cut out thermal coal

[LONDON] Some of the world's largest insurers and pension schemes are warning companies they invest in not to finance, insure, build, develop or plan new thermal coal plants or face sanctions, including possible divestment.

The Net-Zero Asset Owner Alliance, whose members include German insurer Allianz and manage a combined US$5 trillion in assets, is making the call after a recent commitment to set tougher carbon limits on their portfolios.

To meet the terms of the Paris Agreement on climate change, which aims to limit global warming to 1.5 degrees Celsius above pre-industrial norms by 2050, developed economies need to phase out most thermal coal by 2030, with a global phase out by 2040.

In a report seen by Reuters ahead of its release on Monday, the alliance said all companies owned by the group needed to develop their own plans to transition away from thermal coal.

"If no long-term carbon footprint reduction can be produced the members will need to escalate and ultimately divest," Gunther Thallinger, member of the board of management, investment management, environmental, social and governance (ESG) at Allianz, said.

To help guide them, the group issued a set of core principles including that, other than coal plants currently under active construction, no further thermal coal power plants should be financed, insured, built, developed or planned.

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"Alliance members believe that all companies in our portfolios should have a firm understanding of the wider implications for the activities, operations and projects that they are engaged in," the report says.

There should also be an immediate cancellation of all new thermal coal projects that are in a pre-construction phase, including coal mines and related infrastructure, as well as the supply of other products or services.

In addition, all unabated existing coal-fired electricity generation, that which is not captured by carbon sequestration or storage, should be phased out, it said, adding: "Participation in activities and projects that are not aligned with these principles is incongruent with our net-zero goals and the aspirations we have in respect to the different decarbonisation strategies of the companies we invest in."

REUTERS