Skip to content
  • MyNewMarkets.com
  • Claims Journal
  • Insurance Journal TV
  • Academy of Insurance
  • Carrier Management
Insurance Journal - Property Casualty Industry News

Featured Stories

  • AXA XL Launches Insurance Company, AXA XL E&S
  • State Farm to Increase Claims Workforce by 3,000
  • Articles
  • Jobs
  • Markets

Current Magazine

current magazine
  • Read Online
  • Subscribe
  • Login
  • Front Page
    • National
    • International
    • Most Popular
    • Magazine
    • Forums
    • Blogs
    • Videos/Podcasts
    • Newsletters
  • News
    • Most Popular
    • National
    • International
    • East
    • Midwest
    • South Central
    • Southeast
    • West
  • Magazines
  • Research
  • Directories
  • Jobs
  • Features
    • Events
    • Forums
    • Market Directories
    • Quotes
    • Polls
    • Rankings & Awards
    • Insurance Giving Back
  • Subscribe

Return of Coal as Alternative to Russian Gas Threatens European Firms’ ESG Ratings

By Carolyn Cohn and Christoph Steitz | July 26, 2022
Email This Subscribe to Newsletter
  • Article

European companies turning to coal as an alternative to Russian gas face a hit to their environmental, social and governance ratings, leaving them scrambling to impress investors still vocal on sustainability.

Despite an energy crisis following sanctions on Russia, major European investors say they will not relax their investment principles of reaching net zero targets on greenhouse gas emissions by 2050 or earlier.

Investors increasingly use ESG ratings, developed by companies such as MSCI or Sustainalytics, to judge firms’ merits. Burning coal, which puts out more carbon dioxide than alternatives like oil and gas, gives companies a black mark.

European countries including Germany and Italy are nonetheless considering bringing back coal due to the Ukraine crisis, which has cut Russian gas flows. Some companies, such as German speciality chemicals maker Lanxess, have also said they may consume more coal.

Companies forced by cost pressures or national policy to use the fuel could make up ground by finding other ways to burnish their environmental credentials, or by focusing on the S and G in ESG, industry sources add.

“When your emissions go up, all other things being equal, you are in more trouble from a ratings perspective,” said Sylvain Vanston, executive director, climate change investment research at MSCI. “If you come up with a fantastic new commitment, that could counterbalance it.”

But so far, few companies have managed to find a silver bullet to counteract use of the heavily polluting fuel. Lanxess, which has previously acknowledged the hit to its carbon footprint, declined to comment on the potential impact on its ESG rating of burning more coal.

It has however pointed out that if it prices itself out of the market, it could mean plant closures and job losses, potentially affecting the “social” aspect of its operations.

There are other options available to companies looking to preserve their ratings. David McNeil, head of climate risk at Sustainable Fitch, said the agency looks at a company’s broad ESG impact when assessing it. “If a power utility is issuing a green bond, that is something we would look at,” he said.

Some companies such as Italian utility Enel have issued sustainability-linked bonds connected to their overall sustainability performance.

Sustainability-linked bonds and green bonds, which fund specific environmental projects, have however performed poorly in recent months as the prospect of higher interest rates and a possible recession battered corporate debt markets more broadly.

Germany’s largest power producer RWE, whose CEO said last month that Germany needed to save gas in its power sector by replacing it with coal, has previously issued green bonds.

A spokesperson for the group said RWE is still focused on expanding its use of renewable energies and hydrogen with a view to further accelerating a coal phase-out, a strategy to which its investors had given “broad approval.”

Other companies, such as Europe’s top copper smelter Aurubis, also said their aim remains to decarbonize, despite the additional short-term complication of including coal in the energy mix.

Investors insist they are similarly committed. AXA Investment Managers, Allianz Global Investors and Zurich Insurance, which between them manage $1.8 trillion in assets, all said they were keeping to their plans to cut back on coal despite the war in Ukraine.

“We are not changing our position and we are not changing our policy – we are sticking to the course,” said Zurich group head of sustainability Linda Freiner.

So far Europe’s energy crisis is showing few signs of being resolved. It remains to be seen how far either companies or investors can keep faith in the importance of long-term ESG principles like cutting out coal if the situation worsens.

“Coal throws up an energy security question that in the short term is in conflict with the decarbonization problem,” said Alex Simcox, head of ESG investment at asset manager Mondrian.

“If you are in Germany and Russia cuts off gas, even if you are in the Green party, you should accept that the extension of coal-fired power is a pragmatic answer.”

(Reporting by Carolyn Cohn in London and Christoph Steitz in Frankfurt; additional reporting by Ludwig Burger, Christoph Steitz and Patricia Weiss in Frankfurt, Michael Hogan in Hamburg and Marc Jones in London; editing by Jan Harvey)

Photograph: Steam and exhaust rise from the RWE Weisweiler coal-fired power station on Feb. 11, 2021 near Inden, Germany. Photo credit: Lukas Schulze/Getty Images

Related:

  • Insurance Industry Support of Carbon Removal Needed in Drive to Net Zero
  • The Global Urgency of Building the Carbon Removal Industry
  • SEC to Unveil Rule to Crackdown on Funds ESG ‘Greenwashing’
Copyright 2026 Reuters. Click for restrictions.

Topics Europe Russia

Was this article valuable?

Thank you! Please tell us what we can do to improve this article.

Thank you! % of people found this article valuable. Please tell us what you liked about it.

Here are more articles you may enjoy.

Union Pacific Railroad Fined $304K for Firing Employee During Severe Weather
Another Crane, Then Another, Collapses Onto Home in Fort Lauderdale
Viewpoint: State Socialism Meets Insurance
Industry Reacts to Senators’ Letter for Claims Data and Recent Reports

Written By Carolyn Cohn

More From Author

Written By Christoph Steitz

More From Author

The most important insurance news,
in your inbox every business day.

Get the insurance industry's trusted newsletter

Email This Subscribe to Newsletter
  • Categories: International & Reinsurance NewsTopics: Allianz Global Investors, AXA Investment Managers, Climate Change, environmental social and governance (ESG) criteria, greenhouse gas emissions, Russia sanctions, Russian oil and gas, Zurich Insurance
  • Have a hot lead? Email us at newsdesk@insurancejournal.com
More News
Thousands of European Wind, Solar Power Systems Exposed Online: Dutch Researchers
US Gulf Faces Heavy Rain Threat From Developing Tropical System
People Moves: Hartford Names Smith as International Head of Distribution in UK; Augment Risk Taps Haynes From Carpenter for MGA Practice
Agency Network SIAA Acquires MGA Canopy Specialty Insurance
More News Features

Read This Next

  • Return of Coal as Alternative to Russian Gas Threatens European Firms' ESG Ratings
  • Lockton Named in NBA Investigation Into Clippers Salary Cap Circumvention
  • Texas Rangers Pursuing Criminal Investigation Against Camp Mystic
  • Reworking the Insurance Playbook for Evolving Energy Sector
  • Insurance Companies Join Letter to Push TPLF Disclosure in Federal Courts

Insurance Jobs

  • Insurance Data Engineer - Troy, MI (hybrid)
  • Software Engineering Manager (Java) - Illinois City, IL
  • Business Insurance Underwriting Professional Development Program (BI UPDP) Internship - Braintree, MA
  • Full Stack Software Engineer Senior Consultant II - Springfield, IL
  • MD Claims Adjuster – CST/EST - Springfield, IL
  • Insurance Premium Auditor – REMOTE - Remote
MyNewMarkets
  • Agency Guide for a Practical Approach to AI Rollouts
  • When E&O and D&O Lines Start to Blur
  • Emerging Risks to Watch: Quantum Computing, Data Center Buildout, and Peptides
  • Older, Wealthier Renters Drive Changes in Insurance Needs
  • Is It Covered: No Residency, No Coverage? Is Your Home Uninsured?
Claims Journal
  • Google Accused of Overcharging 20 Million Consumers in UK Class Action
  • Prime London Homes Are Increasingly on Frontlines of Extreme Weather
  • McDonald's Hit With Class Action Alleging AI-Powered Menu Price-Fixing
  • Starbucks Sued Over 'Sugar-Free' Claims for Protein Beverages
  • San Diego Sues AppLovin Over Explicit Ads Shown to Kids' Devices
Academy of Insurance education
  • October 6th How to Write: Flood 26
  • October 8th Risk and Insurance for Non-Profit Organizations
  • October 15th The Final Frontier: To Boldly Go Where AI Cannot
  • October 29th Oops, We Got Hacked. Now What?

Insurance News

  • News by Region
  • News by Topic
  • Yesterday

Site Search

Features

  • Insurance Markets Directory
  • Forums
  • Industry Events
  • Agencies For Sale
  • Newswire
  • Insurance Jobs
  • Rankings & Awards

Connect with us

  • Email Newsletters
  • Magazine Subscriptions
  • For Your Website
  • RSS Feeds
  • Twitter
  • Facebook
  • LinkedIn
  • Do Not Sell My Info

Insurance Journal

  • Submit News
  • Advertise
  • Subscribe
  • Reprints
  • Link to Us
  • Contact Us

Wells Media Group Network

  • Insurance Journal
  • MyNewMarkets.com
  • Claims Journal
  • Insurance Journal TV
  • Academy of Insurance
  • Carrier Management
© 2026 by Wells Media Group, Inc. Privacy Policy | Terms & Conditions | Site Map