Lloyd’s should commit to align its insurance and investment with the urgent action required to limit global warming to 1.5°C and prevent a climate catastrophe. The new ESG policy is a small step in the right direction, but there is much more that needs to be done. Lloyd’s can and must play a leading role in accelerating a just energy transition from fossil fuels to renewable energy.
In 2021, Lloyd’s should commit to:
Lloyd’s should take urgent action to significantly improve its ESG policy, and stop insuring and investing in a dying and destructive industry.
Not only is it in our planet’s best interest to transition away from deadly, polluting forms of high-carbon energy, it is in the best interest of the insurance industry to stop underwriting and investing in destructive energy sources that significantly increase catastrophe risks, undermine investments, and destroy reputations.
Lloyd’s does not measure up to its European peers
Lloyd’s ESG policy falls short compared to its European counterparts, like AXA, Swiss Re and Allianz, who have been actively withdrawing from coal insurance and investment.
Insurance companies, as society’s risk managers, have a responsibility to align insurance and investment policy with climate science to avoid unmanageable climate breakdown. While Lloyd’s European counterparts have led the way on climate action and withdrawn from coal, Lloyd’s has, in some cases, stepped in to provide insurance that no one else will. There is no pride in being the insurer of last resort for a dying and destructive industry.
While Lloyd’s counterparts still have to make their policies more ambitious, they all started to act significantly before Lloyd’s, have regularly updated their policies and continue to do so.
We call on Lloyd’s and its peers in the global insurance industry to take the following steps:
- Immediately cease insuring new and expanded coal, oil, and gas projects.
- Immediately cease insuring coal companies, unless they have a coal exit plan that commits to close all coal-related assets by 2030 in EU/OECD countries and by 2040 globally.
- Phase out, in line with a 1.5ºC pathway, insurance for oil and gas companies.
- Divest all assets, including assets managed for third parties, from coal, oil and gas companies that are not aligned with a 1.5ºC pathway. Any company that is building new coal, oil, or gas expansion projects is not aligned with 1.5ºC.
- Bring stewardship activities, membership of trade associations and public positions as a shareholder and corporate citizen in line with a 1.5ºC pathway in a transparent way.
- Establish robust due diligence and verification mechanisms to ensure clients fully respect and observe all human rights, including the right to Free, Prior and Informed Consent (FPIC) as articulated in the UN Declaration on the Rights of Indigenous Peoples.
The Coal Policy Tool provides examples and comprehensive analysis of financial institutions coal policies and the Global Coal Exit List is a resource for investors and financial institutions that want to understand and manage climate risks in their portfolios.