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AIA’s $6 billion in coal investments drawing fire

December 22, 2020

FS Sustainability:

Health and life insurer AIA is under pressure to set targets regarding its portfolio holdings in coal and coal-fired electricity assets, with a US-based think tank estimating the company could hold as much as US$6 billion in coal-related assets.

The Institute for Energy Economics and Financial Analysis (IEEFA) has published a report estimating AIA’s coal-based investments and its actions on how it plans to address that exposure.

IEEFA estimates that based on a top-down analysis, 15-20% of AIA’s US$30 billion infrastructure fund is “probably invested in coal and coal-fired power,” and using a bottom-up analysis by asset class, they estimate that AIA could hold from US$4.1-5.8 billion of coal and coal-fired power exposure in its equity, corporate credit, and quasi-government/SOE credit portfolios combined.

That estimated amount of $4-6 billion would be a range of 2-3% of AIA’s overall investment portfolio, but IEEFA states in its report that “even if just 10% of that USD 6 billion winds up stranded and needs to be written down, it would take a significant bite out of earnings, potentially impact AIA’s brand value, lead to a drop in AIA’s share price, and raise doubts about AIA’s investment management.” 

[Rachel Alembakis]

More: Report calls out AIA’s coal-based assets, policy

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