Statement: Proposed Texas Bill Undermines Insurers’ Ability to Fulfill Their Core Mandate – Assessing Risk
Media contacts: Leslie Samuelrich, lsamuelrich@greencentury.com; 617-747-4380
Pam Podger, Communications Director, ppodger@greencentury.com; 860-822-3887
BOSTON — Texas state legislator, Bryan Hughes, introduced a bill that would include limiting the ability of insurance companies operating in the state to consider environmental risks as determinative factors when underwriting property and casualty risks.
In a recent letter to insurers, the Republican senator asked whether shareholders have requested a halt to insurance coverage of companies involved in the exploration, production, sale or transportation of fossil fuel products in the past five years. The letter also seeks answers on whether insurers have been required to track or reduce greenhouse gases and seeks detailed information on third parties used to advise carriers about ESG (environment, social, and governance) risk factors.
An investment strategy that incorporates environmental, social and governance criteria may result in lower or higher returns than an investment strategy that does not include such criteria.
Insurers regularly assess environmental risk, including those posed by natural catastrophes. They are increasingly incorporating the effects of climate change to inform their risk models.
Michel Leonard, chief economist and data scientist at the Insurance Information Institute told Politico that “It would be very difficult for the insurance industry to insure in an economically viable and sustainable way without paying attention to environmental patterns.”
Despite the Texas legislator’s concerns about oil and gas insurance exclusions, Texas is already described as the “undisputed king” of renewable energy production in the U.S. The state produces nearly 19% of its electricity from renewable sources.
In response to the news, Green Century Funds President Leslie Samuelrich issued the following statement:
“It’s completely inappropriate for legislators to direct how insurance companies identify and calculate risk. Removing environmental risk factors from consideration means that insurers could no longer consider how climate change affects their underwriting decisions and could adversely impact their bottom lines. It violates free market principles and good old-fashioned common sense to restrict companies’ abilities to address their own material risks.”
“We’re one of the shareholders who are asking insurers to phase out underwriting of new fossil fuel supply because we see climate change as a long-term financial risk – to us, and insurers alike. Our focus is on curbing expansion of fossil fuel supply – whose emissions the world can no longer absorb.”
About Green Century Funds
°Green Century Capital Management, Inc. (Green Century) is the investment advisor to the Green Century Funds (The Funds). The Green Century Funds are one of the first families of fossil fuel-free, environmentally responsible mutual funds. Green Century hosts an award-winning and in-house shareholder advocacy program and is the only mutual fund company in the U.S. wholly owned by environmental and public health nonprofit organizations.
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