German insurer Allianz plans to phase out €5 billion worth of fossil fuel bonds in response to growing sustainability concerns, a significant milestone in its responsible investing journey. In 2015, the insurer had backed out of insuring coal projects.
The decision aligns with Allianz’s broader strategy to reduce its exposure to carbon-intensive assets. By divesting from these bonds, Allianz aims to prioritize sustainable investments that promote positive environmental outcomes.
The Munich-based company is withdrawing coverage and investments from fossil fuel projects as of next year, and will stop covering its existing fossil clients when their policies come up for renewal.
The focus on ESG factors reflects a broader trend within the financial industry towards responsible investing. As investors increasingly prioritize sustainability, companies are adapting their practices to align with environmental goals and societal expectations.
The new policy applies to the biggest fossil producers, each extracting more than 60 million barrels of oil or equivalent in 2020, that account for 85% of global production. It also singles out companies that get at least 10% of their revenues from tar sands/oil sands operations.
“Countries face urgent, critical choices in their energy strategies amid heightened geopolitical tension and a rapidly warming climate,” the company said in a statement. “In the face of this energy crisis, immediate and impactful measures are necessary to increase energy efficiency and deploy renewable energy sources at scale and speed.”
Allianz said, “Business and society face existential threats from climate change in a 3 degree Celsius world. As society and business community, we must manage this risk by mitigating climate change. That action is needed now.”
The statement cites the company’s participation in the UN’s Glasgow Financial Alliance for Net-Zero (GFANZ) and includes links to Allianz research papers on energy decarbonization in Europe, the transition to solar and wind in the utility sector, transport in a zero-carbon EU, tar sands/oil sands business models, and the company’s approach to environmental, social, and governance (ESG) performance.
