Lloyd’s and Moody’s to develop an emissions accounting solution through the Lloyd’s Lab

14 Sep 2023

Lloyd’s, the world’s leading marketplace for insurance and reinsurance, today announces a new collaboration with Moody’s Analytics to develop a solution that will help to quantify greenhouse gas (GHG) emissions* across managing agents’ underwriting and investment portfolios. The solution being adopted will aid managing agents in meeting expected regulatory reporting requirements.

Under current frameworks such as Streamlined Energy and Carbon Reporting (SECR), many insurers will be required to report their greenhouse gas emissions. With further regulation from the International Sustainability Standards Board (ISSB) and Corporate Sustainability Reporting Directive (CSRD) coming into force in the next few years, it will be necessary to have standardised reporting methodologies that can be adopted and are ready to use.

Lloyd’s is well placed to help the market in solving the challenge of finding a common standard. By partnering with Moody’s Analytics, Lloyd’s will benefit from their pioneering efforts to solve the challenges of global data availability across public and private companies.

The collaboration will see Lloyd’s and Moody’s develop a solution targeted at accurately assessing scope 3 emissions defined by the Greenhouse Gas Protocol’s 15th category, relating to underwriting and investments. By using the Principles for Carbon Accounting Financials (PCAF) standards as the starting point for measurement, this framework will help to guide clear carbon disclosures for the Lloyd’s market that will align reporting to an industry standard.

The collaboration will kick-off with a 12-week proof of concept exercise, under the banner of Lloyd’s Lab’s new ‘Lab Challenge Programme’. This has been established to tackle the industry’s biggest challenges and accelerate product development initiatives for Lloyd’s and the market that can respond to those challenges.

Lloyd’s and Moody’s will be inviting representatives from the Lloyd’s market to take an active role over the 12 weeks, feeding into the solution as a means for transparency and regulatory reporting.

“This new collaboration with Moody’s represents an important step on the path towards insuring the transition. A robust and credible emissions measurement process will allow us to meet our regulatory reporting requirements while improving transparency across the Lloyd’s market. Moody’s have established expertise in this field and are well placed to help us achieve this.”

Rebekah Clement, Director of Corporate Affairs at Lloyd’s

“Complimenting our leading Insurtech accelerator, the Lloyd’s Lab has created a structured programme for fast fail testing of propositions in partnership with the market to enable faster, more successful innovation to address wider market challenges. A regulatory imperative is coming within the next three years, and the Lloyd’s Lab can play a useful role by helping the market get to a better, swifter, and more consistent outcome.”

Dawn Miller, Commercial Director at Lloyd’s

“Building on our unique experience in delivering specialised sustainable solutions and analytics to brokers, carriers, and reinsurers, we are excited to help the Lloyd’s market quantify its insurance and financed-associated carbon emissions by leveraging our extensive carbon and financial data, advanced name-matching algorithms, and the knowledge of our climate and insurance experts.”

Andy Frepp, General Manager – Risk Solutions at Moody’s Analytics

Notes to Editors

*Emissions reporting currently covers three areas:

Scope 1 – direct emissions from sources owned or controlled by a company.
Scope 2 – indirect emissions from purchased electricity, steam, heat, and cooling.
Scope 3 – all other emissions associated with a company’s activities across its upstream and downstream supply chain.

Scope 3 emissions currently present the most significant challenge for insurers due to limited volumes of data and company disclosures available.
Emissions accounting is a framework to measure and monitor the Greenhouse Gas emissions an organisation emits across three scopes of emissions.
The emissions accounting solution will answer several global sustainability reporting requirements, such as the International Sustainability Standards Board (ISSB) which is expected to be reported against in the UK from 2026.
The Lloyd’s Lab Challenge Programme is built on core innovation and design thinking principles to successfully experiment with new product ideas that require multidisciplinary expertise and cross-industry stakeholder involvement.
The emissions accounting proof-of-concept is not an ESG scorecard, nor is it designed to be used to consider pricing or availability of insurance, or as a tool to influence underwriting decisions. Instead, the approach will focus on transparency for Lloyd’s and will aid the market in meeting future regulatory reporting requirements.

Enquiries to:

pressoffice@lloyds.com

About Lloyd’s

Lloyd’s is the world’s leading marketplace for insurance and reinsurance. Through the collective intelligence and expertise of the market’s underwriters and brokers, we’re sharing risk to create a braver world.

The Lloyd’s market offers the resources, capability, and insight to develop new and innovative products for customers in any industry, on any scale, in more than 200 territories.

We’re made up of more than 50 leading insurance companies, over 200 registered Lloyd’s brokers and a global network of over 4,000 local coverholders. Behind the Lloyd’s market is the Corporation: an independent organisation and regulator working to maintain the market's successful reputation and operation.

We’re working to build solutions for the most current and prevalent threats. As Chair of the Insurance Task Force for HM King Charles III’s Sustainable Markets Initiative, Lloyd’s is bringing the industry together to insure the transition to net zero. Our research community is pooling expertise from across the industry to provide cutting edge insight on systemic risks from climate change to cyber security.

And through our digital-led strategy, The Future at Lloyd’s, we’re making it easier and cheaper to place, price and process cover in the Lloyd’s market.

About Lloyd’s

About Lloyd's Lab

The Lloyd’s Lab is a fast-track, fast-fail environment where new concepts, ideas and products can be tested with the support of experts from the world’s insurance and reinsurance market.

The Lloyd’s Lab brings together InsurTechs, start-ups and ideas which support our market’s shared goal of sharing risk to create a braver world. Our main programme is an InsurTech accelerator which aims to help innovative ideas gain traction and success in our market.

The accelerator gives InsurTechs access to a coworking space in the Lloyd’s building and the chance to develop their ideas alongside their target audience for a period of 10 weeks.

About Lloyd's Lab

About Moody's

Moody’s Analytics provides trusted and transparent data and perspectives across multiple areas of risk – credit; climate; environmental, social, and governance (ESG) – to help market participants identify opportunities and manage the continuously evolving risks of doing business.

Moody’s Analytics’ rigorous and relevant ESG and Climate capabilities provide market participants with a holistic understanding of risk across a variety of complex customer workflows, including insurance underwriting, bank lending and risk monitoring, portfolio and risk management, as well as disclosure and regulatory reporting needs across client segments.

Further information