In December last year, Lloyd’s published its first Environmental, Social and Governance (ESG) report, which set out its plans for accelerating the transition to a more sustainable insurance and reinsurance marketplace.
Following the publication of this report, Lloyd’s has engaged in extensive consultation with the market, governments, regulatory authorities, brokers, NGOs and other key stakeholders, to further develop its ESG strategy and approach.
With the publication of its ESG guidance, Lloyd’s confirmed its intention to align its approach and activities to government policy in achieving net zero greenhouse gas emissions by 2050. Importantly, Lloyd’s outlined its commitment to insure the transition and support its customers as they decarbonise, including harder-to-abate sectors which are critical to the world’s transition to net zero. This includes providing the vital risk management solutions that will underpin and enable businesses, governments and economies to take brave action, drive forward climate innovation and accelerate critical decarbonisation activities over the years ahead.
Recognising the market will need to make its own decisions on the risks it underwrites, the investments it makes, and the way in which to reduces its operational carbon emissions, Lloyd’s has committed to achieve net zero by 2050 and to transparently measure and report on its progress towards that goal.
In support of that commitment, through the SMI Insurance Task Force, Lloyd’s will develop a climate transition measurement framework that will allow the Corporation to begin to track and measure the market’s progress, on an aggregate basis, in transitioning towards a net zero underwriting position by 2050. Following thorough testing and a market pilot with a selected number of managing agents in 2022, Lloyd’s expects to implement a ‘Sustainability Transparency and Reporting’ regime from 2023 onwards to get the first market-wide aggregate baseline view of the carbon contribution of underwriting portfolios to track and report against.