Climate change poses potentially significant financial risks to investments in coal, oil, and gas and utilities that rely on coal, oil and gas. One potentially significant financial risk is that local, state, and national governments will take actions to limit the use of fossil fuels such that investments in those fossil fuels will decline in value and become "stranded assets" with little or no value due to restrictions or limits placed on use of fossil fuels. Another potentially significant financial risk is that consumers and business will decrease or eliminate use of fossil fuels, with the same resulting decline in value in investments in coal, oil, gas and utilities that rely on coal, oil and gas.
In January of 2016, recognizing the potential financial risks to insurer investments in thermal coal, oil, gas and utilities that rely on coal, oil and gas, California Insurance Commissioner Dave Jones announced the Climate Risk Carbon Initiative. There are two major components.
First, recognizing that thermal coal investments were at significant risk of or had become "stranded assets," Commissioner Jones asked all insurance companies doing business in California to voluntarily divest from their investments in thermal coal. Commissioner Jones concluded that thermal coal investments faced significant financial risk from government, consumer and business responses to climate change such that thermal coal was not an asset that would retain value and would instead be stranded on the books of insurers and not available to cover claims costs. Commissioner Jones asked insurers doing business in California to disclose whether or not they had divested or would divest from thermal coal investments.
Second, Commissioner Jones, recognizing the potential significant financial risks posed to insurers' investments in oil, gas, coal and utilities by government, business and consumer responses to climate change, also required insurers with more than $100 million in annual premium to disclose publicly their investments in fossil fuels.
The results of these two components of the Climate Risk Carbon Initiative are shared in this searchable database. The database provides consumers, investors, policyholders, regulators and the general public important information about the extent to which insurers doing business in California are invested in oil, gas, coal and utilities that rely on oil, gas and coal.
The California Department of Insurance is the first to provide this level of insight into the fossil fuel investments of insurers. Commissioner Jones is the first financial regulator in the United States to ask for divestment from thermal coal due to the risk that it is likely to or has already become a "stranded asset." Commissioner Jones is also the first insurance commissioner in the United States to require insurers to disclose publicly their investments in oil, gas, and coal and utilities that rely on oil, gas and coal.
The database reflects information as it was reported by the insurers, or (where indicated) as reported by an independent consultant which reviewed financial reports from insurers. The database is current as of November 15, 2016 and will continue to be updated as the data from insurers is further analyzed and refined.
For more information on other consumer protection efforts undertaken by Commissioner Jones and the Department of Insurance, please click here.