California insurance commissioner demands ‘carbon shaming’ for insurance companies
California insurance companies that invest in hydrocarbon fuel-related companies will be placed on a wall of shame.
The war on fossil fuel continues in California, and this time, insurance commissioner Dave Jones (D) demands that all insurance companies report their investments in “thermal coal enterprises” and requests that they rid their portfolios of such. While apparently lacking the authority to require divestment, Jones is taking a page from the novel The Scarlet Letter by publicly humiliating those companies who have invested in coal-associated companies.
Jones is also asking that insurers identify investments in oil and gas companies and names ExxonMobil as an example. These oil and gas company investments will likely be the next candidates for divestment.
The basis for this demand is the "potential financial risks" to California insurance companies. Owing to Obama's war on coal and his EPA's effort to regulate coal-fired power plants out of existence, there is indeed some risk in these investments due to government regulation and also to the low price of natural gas (due to fracking). Hillary Clinton has also joined the war on coal, and her statement that she wants to close coal mines recently hurt her in the West Virginia primary.
In essence, government is telling corporate boards of directors how to run their companies. Insurance companies invest billions of dollars in various ventures to earn income off the premiums paid by policyholders, yet Commissioner Jones is telling these companies that he is smarter than they are, and he wants to dictate where those investments should be made.
Jones has declared an ideological war on fossil fuel under the pretense of saving the planet. There is no corresponding financial risk review for those insurance companies who have invested in renewable energy, although it certainly is warranted. On the contrary, insurance companies who invest in solar are singled out for special praise.
Several green companies have gone bankrupt, despite being heavily subsidized, including Solyndra and more recently two solar energy giants, SunEdison and Spain’s Abengoa. Indeed, a group of U.S. insurance companies objected to the granting of Chapter 15 bankruptcy protection for Abengoa, as it might hinder their efforts to recover $250 million in surety bonds. Among those insurance companies is Liberty Mutual, which does business in California. There is another troubled solar project in California in the news recently, whose mirrors fried some electrical cabling amid concerns about the plant’s future economic viability.
The motive for Jones's initiative is likely political. He has only two and one half years left in office due to term limits, and he obviously wants to maintain his street cred with the environmental lobby so he can pursue some other statewide office. Jones began his government career in the Clinton administration working as special assistant and counsel to U.S. attorney general Janet Reno.