Lloyd's' focus on a more sustainable future

Lloyd's published its first Environmental, Social and Governance (ESG) Report at the end of last year and while this is a fairly new focus area for Lloyd's it noted that: a) in its history it has a long record of contributing to communities and helping them to recover from disaster; and b) the role that insurance plays in protecting society and supporting global economic growth.

Lloyd's published its first Environmental, Social and Governance (ESG) Report at the end of last year and while this is a fairly new focus area for Lloyd's it noted that: a) in its history it has a long record of contributing to communities and helping them to recover from disaster; and b) the role that insurance plays in protecting society and supporting global economic growth. 

Lloyd's stressed its commitment to playing its part in the global transition to net zero; from the risks it shares and the investments it makes, to the way in which it supports societal progress more broadly. 

Some headlines from the ESG Report include:

• setting targets for responsible underwriting and investment to help accelerate society’s transition from fossil fuel dependency, towards renewable energy sources.
• Lloyd’s to phase out insurance cover for, and investments in, thermal coal-fired power plants, thermal coal mines, oil sands, or new Arctic energy exploration activities.
• from 1 January 2022, Lloyd’s managing agents will be asked to no longer provide new insurance coverages or investments in the activities referred to above.
• managing agents will be asked to phase out the existing coverages referred to above by 1 January 2030 to enable the market to support their customers who are making the transition away from these energy sources towards sustainable energy and business models.
• committing to the phasing out of the market’s and the Corporation’s existing investments in thermal coal-fired power plants, thermal coal mines, oil sands, or new Arctic energy exploration activities by the end of 2025.

Since the publication of the ESG report, Lloyd's has since followed up with a roadmap for climate change setting out 'the sustainability and decarbonisation ambitions of the sectors that are critical to a successful global transition to a low carbon economy, together with a climate action roadmap that highlights the ways in which the global insurance industry will support and accelerate this transition and the delivery mechanisms which will be deployed'. 

The below provides a snapshot of the Lloyd's roadmap:

• Now - immediate insurance industry action to de-risk critical decarbonisation activities, with particular focus on:
• greener industry
• greener transport; and 
• greener industry.
  
  
• Next - further enhance understanding of the evolving risk landscape for priority sectors.
  This involves Lloyd's:
• leading a research initiative into construction materials and techniques in relation to creating a greener industry;
• facilitating a product design sprint to develop and bring products to market in respect of greener transport; and
• committing to expanding coverage to ensure capacity constraints don’t limit growth in respect of greener energy.
  
  
• Beyond - deepen understanding of the risk ecosystem and stand ready to support emerging technologies. The global insurance industry will need to be aware of new technologies and adapt their offerings in the longer term to reflect new risks.
  This includes:
• hydrogen power for home and public buildings;
• development of substantiable fuels;
• next generation nuclear technology; and
• carbon capture and storage technology.

These ambitious commitments will impact the market and managing agents' business plans for the upcoming years. These goals, together with Lloyd's' renewed focus on people and culture, provide a clear vision for the future at Lloyd's.