Groups call on California to ensure insurance industry discloses carbon emissions

As the California Air Resources Board considers binding carbon emissions disclosure measures for large companies doing business in California, a coalition of 40 organizations today called on the board to close a loophole that would allow insurance companies across the state to skirt the requirement, which would leave the public and investors in the dark about the industry's contribution to climate change.

According to the letter sent to CARB, the groups argue that the board lacks authority to carve out an exemption for insurers that does not exist in the statute. Further, the legislative history is clear that the legislature considered — and rejected — a carveout for insurers before passing the law. The board's justification for the exemption relies only on a vague stated desire for consistency between the emissions law, SB 253, and its companion legislation, SB 261. The letter is clear that this rationale is not sufficient to overcome the statutory language and strong public interest in favor of disclosure.

"Insurers are among the leading institutional investors in fossil fuels, investing approximately $580 billion in coal, oil, and gas in 2019 alone," the groups write in the letter. "The burning of fossil fuels is the primary cause of climate change, which means insurers' investments are contributing to the extreme weather events that are driving up costs for consumers. Simply put, it is in the public interest for California stakeholders to have more information about insurance companies' impact on the climate and their progress towards their stated climate goals."

California faces a property insurance crisis driven in large part by climate change, and the crisis is exacerbated by the insurance industry's support for fossil fuels through underwriting and investments. With each subsequent disaster that strikes the state, insurers push prices higher.

In addition to the letter from the organizations, nearly 3,000 California-based members of Americans for Financial Reform Education Fund and Public Citizen called on the board to reverse the carve out for insurance companies and ensure transparency under the law through individual public comments.

Quotes

"Insurance companies are among the biggest drivers of climate change, through their investments and underwriting of fossil fuel projects around the world," said Clara Vondrich, senior policy counsel with Public Citizen's Climate Program. "To allow them to hide behind greenwashing claims of climate ambition as they deny claims and jack up insurance premiums would be a slap in the face for all Californians. The Board must not create a loophole for the insurance industry under SB 253. Consumers and investors have a clear interest in knowing how insurance companies are exacerbating climate change."

"The insurance industry is pulling out all the stops to escape accountability for its role in driving the climate crisis. Insurance companies have profited by backing the fossil fuel industry for decades, knowing full well that the resulting climate change was going to upend insurance markets. Now that climate impacts are here, insurance companies are leaving the public out to dry, all while generating record underwriting and investment profits," said Alex Martin, climate finance policy director at Americans for Financial Reform Education Fund. "CARB must stand up to the insurance industry. The public, and the groundbreaking law passed by the California legislature, demand it."

Click here to read the entire letter.