Marsh can no longer sit on the fence: it must rule out brokering insurance for Adani
The conservative International Energy Agency in May warned against governments developing Covid-19 recovery plans that back fossil fuels for fear they’d expose nations to “escalating financial, health and social risks”. The thinking is sound.
Unfortunately, governments seem incapable of learning from past catastrophes, or thinking long term and strategically to prepare better for those to come. Covid-19 is very much a dress rehearsal for what awaits us with climate if governments continue to ignore the science, and the policy demands for an effective response.Last summer’s devastating bushfires proved Australians are highly vulnerable to the impacts of climate change. So too are our insurers. As of 23 January the Insurance Council of Australia had tallied 20,000 bushfire-related claims, with insured losses estimated at A$1.65bn.
Climate change carries massive business risks, and acting to reduce emissions is in the best interests of insurance companies. Thermal coal is the biggest single contributor to climate change.
Reliable modelling and analysis suggest that at least 90% of existing coal reserves can’t be mined for electricity generation if we are to meet the imperative of a low carbon world by mid-century.
Renewable energy is now cheaper and a safer bet for investors. Nineteen of the world’s largest insurance companies have now adopted policies ending or limiting cover for, and investment in, coal projects.
As some insurance companies begin to take much-needed responsibility and act on climate change by restricting their involvement in coal projects, insurance brokers, who arrange insurance deals for big corporates, can no longer sit on the fence. Brokers need to lead from the front by refusing to arrange insurance for new coal projects that are fuelling dangerous climate change, such as Adani’s controversial Carmichael mine.
Global insurance giant Marsh has a unique opportunity to be a global leader. Marsh has acted as a broker for Adani mining since 2015, helping to facilitate Adani’s controversial Carmichael coal project. Adani’s giant coalmine will help open up the Galilee Basin, one of the largest unexploited coal reserves on Earth, making it impossible to limit warming to 2C.
Marsh has been vocal in acknowledging the huge risks climate change poses to the insurance industry. It coauthored the 2020 World Economic Forum’s Global Risks Report that highlights the economic and environmental vulnerabilities of not acting to rapidly reduce emissions. Dan Glaser, the president and chief executive officer at Marsh, has publicly spoken about climate change as one of the top risks for the company, particularly in relation to the climate-driven impacts of wildfires and hurricanes and the costs for the insurance industry.
Marsh talks the talk when it comes to climate risk but, by working with Adani to help broker insurance for the Carmichael coal project, it is walking us all into a dangerous future.
In March, staff bravely raised concerns about their company’s involvement in the project and were told senior US executives were meeting to decide a position on the Carmichael mine and Marsh’s involvement with other coal projects.
At their AGM this week, Marsh is expected to announce a new climate policy. By continuing to provide support for new coal projects such as Adani’s, Marsh is not only jeopardising the future of its own business interests and those of its customers, it is also undermining a safe climate for future generations.
The insurance industry and global
markets are moving away from coal. Westpac recently announced plans to divest from thermal coal by 2030 and 16 major insurers – including Allianz, AXA and Swiss Re – have so far refused to underwrite the Adani Carmichael project. It’s time for brokers like Marsh to join them by ruling out brokering insurance for Adani.
Marsh must insure our children’s future against catastrophic climate damage, not a billionaire’s coalmine that will rob future generations of a safe climate and drive up risks for the entire insurance industry.
• Dr John Hewson is an honorary professor at the Crawford School of Public Policy, Australian National University, and a former leader of the Liberal party