Insurance and reinsurance marketplace Lloyd’s of London has announced plans to join the UN-convened Net Zero Insurance Alliance (NZIA), as part of a commitment to transition all of its operational and attributable greenhouse gas emissions to net-zero by 2050, at the latest.
The move builds on Lloyd’s existing commitment to reduce all the operational emissions at its building in London to net zero before 2025.
In joining the NZIA, Lloyd’s will transition its Central Fund to net zero by 2050, by redirecting capital flows to green investments, with a roadmap set to be published within the next 12 months.
It will also support all market participants to introduce and implement their own plans in order to reach a net zero underwriting position for the market by 2050, with formal expectations expected to be embedded into the Lloyd’s market oversight framework shortly.
As part of this development, Lloyd’s is creating a new market-wide ‘Sustainability Transparency and Reporting Regime’ that 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.
“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,” said John Neal, CEO of Lloyd’s.
Rebekah Clement, Sustainability Director at Lloyd’s, also commented: “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.”
“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.”
By joining the Net-Zero Insurance Alliance, convened by the UN’s Principles for Sustainable Insurance Initiative (PSI), Lloyd’s also becomes part of the Glasgow Financial Alliance for Net Zero (GFANZ).
GFANZ now includes over 250 financial firms from across the entire financial system, which are responsible for assets in excess of $88 trillion and are committed to aligning capital with net zero.
“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,” said Mark Carney, the UK Prime Minister’s Finance Adviser for COP26.
“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.”
And finally, Nigel Topping, UN High-level Climate Action Champion, stated: “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.”