Japanese insurers need to become climate leaders

The world is moving away from coal, and the insurance industry plays an important role in the process. Yet Tokio Marine and other Japanese insurers have so far missed the opportunity to demonstrate leadership in the transition to clean energy.

Coal is the single biggest source of carbon-dioxide emissions. The UN Environment Program’s recent Production Gap report found that we cannot afford to build any new coal projects and need to reduce coal consumption by 11% per year in order to limit global warming to a manageable 1.5 degrees Celsius.

This task has become easier with the rapid development of renewable energy sources, which today are cheaper than the operation of existing coal power plants in much of the world.

Thirty-four governments have committed “to accelerate the transition from coal to clean energy” in the Powering Past Coal Alliance. Last year, when the global economy slowed under the impact of the Covid-19 pandemic, global coal consumption dropped by 5%. Yet more than 700 coal power plants are still under construction or in the planning pipeline, and coal consumption risks bouncing back when the global economy gathers steam again.

Insurance companies are in a unique position to accelerate the transition from coal to renewable energy. With their access to the latest climate science, they have warned about the risks of global warming since the 1990s, and last year they paid out no less than US$82 billion for natural disasters fueled by climate change.