Generali and Munich Re under fire from activists and shareholders over coal

Insurance of Polish and Czech projects questioned by shareholders

Shareholder campaigners have raised concerns over the insurance of coal projects in Poland and Czech Republic by Italian firm Assicurazioni Generali and German reinsurer Munich Re, due to climate and health concerns and because they argue it is a loss-making business. 
Re:Common, an Italian environmental and human rights association, brought those concerns to Generali’s AGM on 19 April, in cooperation with campaigners of the Unfriend Coal initiative.
Generali announced in February a Climate Change Strategy that would see the company divesting €2bn from coal as an asset owner, as well as by “maintaining a minimum level of exposure in the coal sector” regarding underwriting activities.
Generali stated it would allow exceptions “only in those countries where the production of electrical and heating energies is still dependent on coal, without alternatives in the medium term”.
Alessandro Runci, Campaigner and Researcher at Re:Common, told RI that Generali’s strategy has two main loopholes.
“We figured out that the exceptions are Poland and Czech Republic. Any coal policy should be focused on the two countries in Europe which are expanding coal. We want those exceptions removed.”
Runci added that the second main gap is the lack of restrictions to underwriting policies. He said Re:Common wants a public commitment from Generali that it will not “insure coal plants and coal mines anymore.”
According to a study published in February by Unfriend Coal, Generali – together with Munich Re and Allianz – is the underwriter of state-owned Kozienice (the second largest coal power plant in Europe) and Opole (the biggest currently under construction). 
In addition, Generali and Munich Re are the underwriters of the Turów lignite open-pit mine.
Asked about Re:Common’s concerns, Generali referred to a statement that said: “In Poland, the tenth biggest consumer of coal in the world and the second biggest in Europe with 92% of its electricity and 89% of its heating generated using coal, the reduction could realistically take many years.”It added: “Generali has therefore opted to take a pragmatic approach, promoting and encouraging a series of projects for the adjustment of energy plants, some of which will be covered by coinsurance, and the modernisation of the plants.”
By contrast, the Unfriend Coal campaign highlighted AXA, one of Generali’s peer, whose climate policy includes divestment as well as phasing out of insurance coverage for new coal construction projects.
Peter Bosshard, Finance Programme Director at The Sunrise Project, part of the Unfriend Coal campaign, told RI: “Coal makes up a very small part of the global economy and of investment portfolios today. The tiny percentage indicates how easily Generali could divest from it, but with oversized climate and public health impacts.”
Separately, the Association of Critical Shareholders, an NGO campaigning on ethical and environmental issues at German listed companies, filed a countermotion at Munich Re’s AGM (scheduled for 25 April) questioning that the reinsurer is financing climate-harming energy production.
The German shareholder activists said Munich Re should exclude from its universe not only stocks but also the bonds of companies that earn more than 50% of revenues from coal businesses.
They also took issue with its provision of insurance and reinsurance coverage at Kozienice and Opole plants, and the Turów mine.
They added that Munich Re is supporting ZE PAK, an energy company that aims at opening three mining facilities to mine lignite, as well as PZU, a Polish state-controlled insurer that backs the coal industry, according to their countermotion.
The city of Katowice, about 100 km off the Opole coal plant in the South of Poland, will host in December this year the 24th session of the Conference of the Parties (COP24) to the UN Framework Convention on Climate Change. Poland also became the first country to issue a sovereign green bond back in 2016.

Responsible Investor is hosting a webinar next week, dedicated to the topic of integrating ESG into insurance industry practices. For more details, see here.