Lloyd’s to stop covering coal, oil and Arctic exploration

Lloyd’s will ask its syndicates to cease writing new cover for thermal coal-fired power plants, thermal coalmines, oil sands and Arctic energy exploration from 1 January 2022, and phase out renewals with existing clients in the sector by 2030. In publishing its first environmental, social and governance (ESG) report, Lloyd’s has responded to pressure from campaign groups, including Insure Our Future. Insure Our Future welcomed the commitments after having recently named Lloyd’s as the last major European insurer to still back coal. In line with its new underwriting policy, Lloyd’s and its managing agents will stop new investments in thermal coal-fired power plants, thermal coalmines, oil sands and new Arctic energy exploration activities from 1 January 2022. Existing investments in companies with business models that derive 30% or more of their revenues from thermal coal-fired power plants, thermal coalmines, oil sands or new Arctic energy exploration, will be phased out by the end of 2025. Lloyd’s also said it will derive 2% of its premium income from innovative and sustainable insurance products by 2022. It will develop a new risk centre next year to research new insurance products for systemic risks such as climate change. Insure Our Future said Lloyd’s’ new policy is a “step in the right direction” and raises the percentage of (re)insurers to have adopted coal restrictions to 56%. But its European coordinator Lindsay Keenan said Lloyd’s should make the new policy effective immediately for new business, and bring forward the phasing out deadline for renewals to January 2021. “Lloyd’s’ 2030 deadline is not justified by climate science and the urgent need for action. We will continue to hold Lloyd's accountable until it has met these recommendations,” she said. Flora Rebello Arduini from the SumOfUs campaign said Lloyd’s insurers should not renew cover for major projects such as the Adani Carmichael coalmine and the Trans Mountain tar sands pipeline extension when they come up for renewal in 2021, rather than waiting until 2030. “The time to act is now. Lloyd’s must set binding market-wide policies that make clear to all stakeholders what can and cannot be done under Lloyd’s’ brand name and credit rating,” she said. Adam McGibbon, UK campaigner for Market Forces, said 17 Lloyd’s syndicates have already committed not to insure Adani Carmichael, but named Brit and Convex as “hold-outs”. Lloyd’s said its strategy for a more sustainable insurance and reinsurance market aligns with the UN’s Sustainable Development Goals and supports the principles set out in the Paris Agreement. Lloyd’s said it wants its operations to achieve net-zero carbon emission by 2025 and will allocate 5% of its Central Fund to impact investment by 2022. Its ESG report also underlines Lloyd’s recent work to shift the market’s culture towards greater diversity and inclusion. Building on gender targets set during 2020, Lloyd’s will announce ethnicity targets next year. Bruce Carnegie-Brown, chairman of Lloyd’s and its ESG committee, said: “This is the first time we have set an ESG strategy for the Lloyd’s market and it represents an important milestone on the journey towards building a more sustainable future… We will work closely with our market and customers to help them plan for these changes as we implement a long-term managed programme towards sustainable, responsible underwriting.”

Lloyd’s to stop covering coal, oil and Arctic exploration

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