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Lloyd’s of London announces climate targets

UK’s insurance marketplace and home to Carney’s ‘Tragedy of the Horizon’ speech promises to cut ties with coal, oil sands and Arctic energy exploration

Iconic insurance marketplace Lloyd’s of London has set “publicly accountable” targets for its members’ “responsible underwriting and investment”, including phase-out plans for insuring thermal coal, oil sands and new Arctic oil exploration. 

Mark Carney, then Governor of the Bank of England, gave his seminal ‘tragedy of the horizons’ speech at Lloyd’s in 2015, describing the marketplace as the ‘bedrock of the UK insurance industry’. That speech, which focused on the dangers of ignoring climate risk, led to the formation of the Task Force on Climate-related Financial Disclosures; but Lloyd’s has remained conservative on climate change, increasingly coming under fire from campaign groups for its hands off approach.

However, the new plans mean Lloyd’s managing agents will be asked not to provide new insurance to projects such as the controversial Carmichael coal mine currently being developed in Australia. 17 Lloyd’s syndicates, including two of Adani’s current insurers, have already dumped the project following public pressure. 

The target date for not renewing existing cover for such projects is January 2030, and the deadline for phasing out existing investments in companies with business models deriving 30% or more of their revenues from fossil fuels is 2025. 

They also include a target for 2% of premium income to be derived from innovative and sustainable insurance products by 2022. 

Bruce Carnegie-Brown, Chairman of Lloyd’s ESG committee and Chairman of Lloyd’s, 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 have the opportunity to play our part in building back a braver, more resilient world.”

Lloyd’s also said it would publish a roadmap to having Net Zero operations by 2025, and that it will allocate 5% of its Central Fund to impact investments by 2022.