The London Stock Exchange (LSE) has reclassified oil and gas companies, and coal companies previously listed as “basic materials/mining” companies, as non-renewables as large institutional investors pull back from fossil fuels. Through December 2018, over 1,000 institutions with managed investments worth almost $8 trillion have committed to divest from fossil fuel producers, led by insurers, pension funds and sovereign wealth funds.
In June, Norway’s parliament instructed its country’s $1 trillion sovereign wealth fund to divest an estimated $13 billion from eight coal companies and around 150 oil producers. The fund, one of the world’s largest, will also move up to $20 billion into renewable-energy projects and companies.
Insurance companies are also sending energy companies a message
On July 1, insurance giant Chubb joined an industry-wide shift away from coal-related underwriting and investment, joining the likes of Hannover Re, Allianz Group, Munich Reand Swiss Re. The firm announced it would stop underwriting the construction or operation of new coal-fired plants, and end debt or equity investments in companies that generate over 30 percent of revenue from coal production. The Insurance Journal reported, 57 more insurers committed to divesting some or all of their thermal coal investments in 2018 compared to 2016.
The London Stock Exchange’s industry reclassifications suggests the time is past for fossil fuel companies to escape the risk of stranded assets.