Henri de Castries, chief executive officer at Axa, believes that the facts about climate change are 'undeniable'

Axa, one of the world’s largest insurers, has become the first global financial institution to shun investments in coal companies.

The French group, which has more than $1tn in assets under management, will sell €500m of coal assets between now and the end of the year, its chief executive, Henri de Castries, said at a business and climate change conference in Paris on Friday.

Axa also said it would put €3bn into green investments between now and 2020, mainly in clean technology, green infrastructure and green bonds.

The move makes the French group by far the biggest recruit to an international fossil fuel divestment campaign that aims to stigmatise the use of coal, oil and gas because of their impact on the climate.

Insurance companies have been the most active groups in the financial sector urging governments to take tougher action to combat global warming because they are among the most exposed to the extreme weather that scientists predict is likely to increase as the climate changes.

“The facts are undeniable. If we think we can live in a world where temperatures would have increased by more than 2 degrees Celsius we’re just fooling ourselves,” Mr de Castries told the conference.

He told the Financial Times after making the announcement he believed that Axa’s move would inspire other financial institutions to do the same.

“When the industry leaders are doing things, that creates momentum,” he said.

The divestment push has already seen the heirs to the Rockefeller oil fortune and Stanford University in the US announce plans to curb their coal investments.

In the UK, the Church of England and University of Oxford have taken similar steps.

But financial groups, including those professing a deep concern about global warming, have largely kept holding fossil fuel assets, arguing they can have a bigger effect on energy companies by engaging with them about climate risks.

The insurer’s announcement was made as Paris prepares to host UN talks among almost 200 countries in December aimed at sealing a new global warming pact.

Some bankers at Friday’s conference said Axa’s move was clearly unprecedented, though its immediate financial impact was minor.

“The reality is that there are 20 oil and gas companies with a combined market cap of $2.2tn, so a little bit of divestment here and there isn’t making a dent in that,” said Abyd Karmali, managing director for climate finance at Bank of America Merrill Lynch.

“But what’s interesting about today’s announcement is that it is a mainstream financial institution that’s divesting, and we haven’t seen that before.” Axa said it would divest interests in mining companies that derive more than half of their turnover from coal mining, and electric utilities deriving over half of their energy from thermal coal plants.

The provisions on miners would exclude some of the world’s largest mining companies, including BHP Billiton, Rio Tinto, Glencore and Anglo American, which are broadly diversified.

Coal has in recent years become less important to many diversified miners because of the slump in its price. The largest “pure play” listed coal companies include US miners such as Peabody Energy as well as China’s Shenhua.

By Pilita Clark in Paris
Additional reporting by Michael Stothard in Paris
Financial Times