Climate Risk Carbon Initiative
In early 2016, the Department undertook an effort to evaluate the degree to which California insurers might be impacted by the effects of climate change on the economy. Because of climate change, the world is shifting toward the use of renewable energy and away from fossil fuels. As a result, investments in enterprises that generate a significant portion of their revenue from fossil fuels have the potential of experiencing precipitous declines in value. The Climate Risk Carbon Initiative was designed to provide the public with information relating to potential climate change-related financial risks faced by California insurance companies resulting from their exposure to fossil fuel-based investments. As a focal point of this Initiative, insurers were asked to voluntarily divest from thermal coal investments.
The Department conducted a Climate Risk Data Survey and has compiled the information from the Data Survey into a database that provides a detailed evaluation of insurers' investment portfolios to determine if they hold high-risk fossil fuel assets - particularly investments in thermal coal. It also includes the responses to the divestment request.
Further, the Department engaged 2 Degrees Investing Initiative to perform a forward looking scenario analysis of insurer investments, with particular concern regarding thermal coal investments which remain a serious long-term risk despite recent short-term fluctuations. The Department has posted aggregate climate risk scenario analysis results on its website and is sending individual insurer reports to analyzed insurers with the most assets under management and the greatest exposure to thermal coal. Other analyzed insurers can request their individual insurer reports from 2 Degrees Investing Initiative.
The following sections of this Website contain information regarding the Climate Risk Carbon Initiative.