Japanese insurance company Tokio Marine Holdings [8766:JP] will stop financing and underwriting new coal mining projects both in Japan and abroad from October, as reported by Nikkei on September 27. Last year, Japan’s three largest insurance conglomerates, namely Tokio Marine, Sompo Japan [8630:JP], and Mitsui Sumitomo [8316:JP], made decisions to stop underwriting new coal power projects. Tokio Marine will be the first Japanese insurer to withdraw from the coal mining business, a move likely to drive the other two insurers to do the same.
Japanese insurance companies gain around USD91m in revenue per year from underwriting coal mining projects, according to Nikkei. Without insurance against critical incidents such as natural disasters and construction-related accidents, coal mining companies face extremely high risks in operation. As the global energy transition gains momentum, coal mines and coal power plants around the world are exceedingly at risk of becoming stranded assets, and investors are under pressure to move away from coal-related assets. Many major insurers in the West have already committed to eliminating coal from their business, including Allianz [ALV:GR], AXA [AXA:US], and Swiss Re [SREN:SW]. In addition to corporate practices, in May, Japan committed to cease public financing for coal projects overseas as part of a G7 agreement. As of 2020, the country was the fifth largest emitter in the world. It has set a goal to reduce greenhouse gas emissions by 26% from 2013 levels by 2030 and be carbon neutral by 2050.