AIG CEO Brian Duperreault clearly hasn’t gotten the memo.
The Intergovernmental Panel on Climate Change has demonstrated that we cannot afford to build any new coal projects and need to phase out existing capacity quickly if we want to have a fighting chance of achieving the goals of the Paris Agreement. The UN Secretary General has called on the world to stop building new coal projects from this year. And 19 insurance companies – including four from the United States – have pledged to stop or limit their coverage of new coal projects.
AIG has acknowledged that climate disasters “have adversely affected our business in the past and could do so in the future”. Yet when it comes to the transition away from coal, the US insurer is missing in action. At a panel at the World Economic Forum in Davos, CEO Brian Duperreault confirmed that AIG will continue to offer insurance for the coal industry.
When questioned by Financial Times editor Gillian Tett, Duperreault called a withdrawal from the coal sector “simplistic”, arguing that coal is “being taken out of the ground because people need it”. Rather than walking away from the coal sector, the CEO said, AIG needs to work with clients who are “looking to transition their companies away from it, whether they’re the ones who produce or use it”.
Brian Duperreault’s argument is spurious. If AIG were indeed concerned about supporting the transition away from coal, the insurer could adopt a policy which rules out support for new coal projects and clients and defines a transition period during which it will still offer coverage to companies shifting away from coal. This is after all what peers like AXA and Zurich have done.
In comparison, AIG’s support for coal appears to be indiscriminate. According to the insurance intelligence company Finaccord, AIG currently ranks among the world’s three biggest coal insurers. The US insurer even provided coverage to Adani Australia, the developer of the huge Carmichael coal mine in Australia, and has refused to rule out future support for the project.
Brian Duperreault acknowledged at the World Economic Forum that AIG was under pressure from its employees to move on sustainability issues. We tip our hat to the courageous insurance professionals who are pushing for tangible climate action within their companies. They will likely not be satisfied by the response they got from their boss in Davos.
BlackRock, another Wall Street titan, recently adopted a sweeping series of climate commitments, including the divestment of its $1.8 trillion in active funds from thermal coal mining companies. BlackRock adopted these measures after its offices and managers were relentlessly protested, blocked and heckled over many months.
As the climate catastrophe takes hold, financial institutions and other companies can avoid serious reputational damage with their employees and the public at large if they act early and decisively. They can also reap benefits if they position themselves for the inevitable low-carbon transition in good time. Again, Brian Duperreault doesn’t seem to have gotten this memo. His company should brace itself for some serious public pressure.