Lloyd’s faces activists’ wrath over lack of climate action

Climate organisations are turning their sights once again on Lloyd’s of London (Lloyd’s), today as new research said the market is failing to meet the litmus test for climate responsibility by playing its part in stopping fossil fuel expansion.

New analysis by Reclaim Finance of Lloyd’s top managing agents, found despite its net zero pledge, Lloyd’s has no policy in place to end fossil fuel expansion and has failed to impose its “very limited” policy on its managing agents.

Reclaim Finance, a member of the Insure our Future network has urged Lloyd’s to act on its net zero commitments and strengthen its measures, including additional sanction mechanisms to encourage its managing agents to act .

The analysis claimed Lloyd’s fossil fuel policy has so far only focused on coal and some unconventional oil and gas projects, “which is inconsistent with the net-zero pledge it has made as a member of the Net Zero Insurance Alliance (NZIA)”.To reach a net zero goal by 2050 following a 1.5°C pathway, the International Energy Agency (IEA) has projected the end of the development of new fossil fuel production projects beyond those approved in 2021.

Lloyd’s, which operates through its managing agents, does not make access to its market conditional on the adoption of policies that exclude insuring coal expansion and it has yet to require any measures to address conventional oil and gas expansion.

Reclaim Finance analysis of Lloyd’s top 20 managing agents, who represent over 80% of the Lloyd’s market annual gross written premium, found that:

  • Six have not publicly adopted any measures at all on fossil fuels.
  • Nine have not publicly adopted measures to comply with Lloyd’s recommendations that its managing agents no longer insure new mines and coal plants (from January 2021).
  • Ten have not publicly adopted measures to comply with Lloyd’s recommendations not to insure new tar sands and Arctic oil and gas exploration activities (from January 2021) including Liberty Managing Agency and MS Amlin.
  • Half of Lloyd’s top 20 managing agents have adopted Lloyd’s current recommendations on not insuring new coal, tar sand and Arctic energy projects.

Ariel Le Bourdonnec, insurance campaigner at Reclaim Finance explained: “Despite recent extreme weather events which cost the Lloyd’s market billions, the world’s largest insurance market appears to be unconcerned by the consequences of the climate crisis. These results show that Lloyd’s has done nothing to turn its net zero commitment into a reality. Lloyd’s fine words must be turned into actions that drive change throughout its market. This is the only way in which it can deliver on its net zero commitments.”

Two managing agents, Munich Re Syndicate and Argenta Syndicate have gone significantly further and committed to stop insuring new oil and gas fields. This proves that it is possible for any managing agents to take their responsibilities and adopt the measures that are required on fossil fuel expansion to meet their net zero pledges.

However earlier this week Beazley indicated to Reclaim Finance its has decided to align with Lloyd’s policy and no longer underwrite new coal projects and new tar sands, or Arctic energy exploration projects, or companies which generated more than 5% revenues from these activities.

“This information, which can be found on Beazley’s TCFD report recently updated in March 2023, was indicated to Reclaim Finance as the first response to a series of emails sent to them from January 2023 to the day before the release of the report,” a spokesperson for the group said. “We acknowledge and welcome Beazley’s commitment while we call on the managing agent to integrate these commitment into a formal sector policy and to adopt further measures to align with the IEA NZE’s projections regarding the end of new oil and gas fields and new LNG terminals.”

The report added, Lloyd’s, which in 2018 represented 40% of the global insurance premiums linked to the energy sector, is one of the remaining members of the NZIA still willing to underwrite the expansion of coal, oil and gas. Its inadequate policy is in stark contrast to the best practices of many of its NZIA peers who have committed not to insure new coal or new oil and gas projects.

Lindsay Keenan, European coordinator, Insure Our Future added: “ Lloyd’s is not taking climate science seriously, it is undermining the climate action of its peers and Lloyd’s climate pronouncements, which it presumably made to attract investors, are laid bare by its managing agents’ lack of action. Lloyd’s greenwashing will not help solve the climate crisis, worse, it is driving its industry into the wall by fuelling more losses due to more severe climate risks .”

Reclaim Finance said it was now calling on Lloyd’s to set and monitor the adoption of a clear framework for its managing agents that immediately requires Lloyd’s managing agents to align their practices with its current and future policy on fossil fuels within a year after adoption by Lloyd’s and set enforcement mechanisms and sanctions if they do not comply after the one-year deadline.