Lloyd’s of London said on Thursday it would join its peers in stepping up efforts to cut carbon emissions and push members of the commercial insurance market to do the same, days before international talks start. on the climate in Scotland.
Lloyd’s has long been seen as a laggard on climate action, leaving the decision on whether or not to underwrite business in a range of high-emission industries to its roughly 100 union members amid fierce criticism from activists.
As pressure mounts on financial firms to act on the climate, Lloyd’s said it has joined the United Nations-convened Net Zero Insurance Alliance (NZIA), a body aimed at reducing emissions from the sector and helping to limit global warming.
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By joining, Lloyd’s has said it is committed to reducing all of its operational and attributable greenhouse gas emissions to net zero by 2050 at the latest. It will also establish, publish and report every five years interim science goals to ensure short-term action.
Part of that effort would see it shift its £ 3 billion ($ 4.12 billion) central fund, which supports member commitments, to zero by switching to green investments.
“(We) are fully committed to working collaboratively across the financial industry to achieve its net zero ambition,” Lloyd’s chief executive John Neal said in a statement.
On the more controversial issue of its members’ activities, Lloyd’s wrote a “Dear CEO” letter to its insurers last week warning them that they should develop an environmental, social and governance plan in the second half of 2022.
This follows the launch of Lloyd’s inaugural ESG strategy last year, years behind many of Europe’s leading insurers and reinsurers.
“Lloyd’s will advocate and support all market participants to introduce and implement their own net zero plans to achieve a net zero underwriting position for the market by 2050 at the latest,” he said in the press release.
“These new formal expectations will be incorporated into Lloyd’s market surveillance framework, placing climate action at the heart of annual business planning cycles with unions.”
The ESG commitments of Lloyd’s members would be a key part of the risk assessment process when Lloyd’s signs their annual business plans for 2023, he said, which in turn can affect members’ ability to underwrite. business in the market.
“Achieving net zero emissions will require transformation across the economy,” said Nigel Topping, senior UN climate action champion at COP26 climate talks that start on Sunday. in Glasgow.
“Insurance will be absolutely essential to enable this transition and build resilience to climate shocks.
“I welcome Lloyd’s ambition to lead the Lloyd’s market towards a net zero underwriting position by making full use of its influence with market players.
($ 1 = 0.7288 lb) (Reporting by Simon Jessop and Carolyn Cohn; editing by Steve Orlofsky)
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