Lloyd’s vows to lead market to net zero underwriting position
Re/insurance marketplace Lloyd’s of London is the latest industry player to join the UN-convened Net Zero Insurance Alliance (NZIA) and become part of the Glasgow Financial Alliance for Net Zero (GFANZ), stating its “commitment to cross industry collaboration to mitigate and manage the impacts of climate change” and accelerate the transition to net zero.
In joining the alliance, Lloyd’s said it will transition all of its operational and greenhouse gas emissions to net-zero by 2050 “at the latest”. It will also set, publish, and report against, interim science-based targets every five years to drive near term action.
Lloyd’s has committed to moving its Central Fund to net zero by 2050 by redirecting capital flows to green investments that enable and accelerate the transition.
It will also advocate and support all market participants to introduce and implement their own net zero plans in order to reach a net zero underwriting position for the market, with formal expectations embedded into the Lloyd’s market oversight framework, putting climate action at the heart of annual business planning cycles with syndicates.
As part of this “critical development”, Lloyd’s is creating a new market-wide ‘Sustainability Transparency and Reporting Regime’ that will be used to measure and report on the market’s progress towards a net zero underwriting position by 2050. The measurement framework will be piloted with a select group of managing agents in 2022, before being refined and scaled across the marketplace in 2023.
The regime will develop a standardised methodology to measure and disclose the GHG emissions of insurance and reinsurance underwriting portfolios, and will help catalyse further action throughout the sector.
John Neal (pictured), chief executive officer of Lloyd’s, said: “We are delighted to join the Net-Zero Insurance Alliance and are fully committed to working collaboratively across the financial sector to achieve its net zero ambition.”
“There is an enormous opportunity for the global insurance industry to step up and support our customers across multiple industries as they transition to a sustainable future,” added Rebekah Clement, sustainability director at Lloyd’s. “In addition to setting out our own commitments to help accelerate this process through the Net-Zero Insurance Alliance, Lloyd’s also has a unique role to play in helping individuals, companies and communities across the world increase their resilience, innovate and transition to a low carbon economy.”
Mark Carney, the UK Prime Minister’s Finance Adviser for COP26, commented: “It was in the Lloyd’s building that I first called on the financial sector to break the ‘tragedy of the horizon’ and confront climate risk before it was too late. I welcome Lloyd’s joining the Net-Zero Insurance Alliance and the Glasgow Financial Alliance for Net Zero (GFANZ). By joining the Net Zero Insurance Alliance, the gold standard for net zero commitments and action, Lloyd’s is demonstrating its commitment to net zero and enabling a more resilient, smooth and rapid transition.”
Nigel Topping, UN High-level Climate Action Champion, remarked: “Achieving net-zero emissions will require transformation across the entire economy. Insurance will be absolutely critical to enabling that transition and to building resilience to climate shocks. I welcome the ambition from Lloyd’s in leading the Lloyd’s marketplace to a net zero underwriting position by using their influence with market participants to full effect. Industry collaboration will also be essential to turning commitment into implementation and achieving real world outcomes. We have no time to lose.”
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