Lloyd’s of London is scaling back its exposure to coal and oil sands, the commercial insurance market said in its first sustainability report on Wednesday, in a reversal of its traditional hands-off approach to climate change strategy.
Lloyd’s acts as regulator for around 100 syndicate members, and leaves decisions on underwriting and investment strategy to them. But other regulatory bodies, such as the Bank of England, have stressed the risks of climate change for financial institutions.
Lloyd’s has come under fire from activists because its members have insured controversial projects such as Adani Enterprises’ Carmichael thermal coal mine in Australia and the Canadian government’s Trans Mountain oil pipeline.
European insurers like AXA and Zurich have already pulled back from underwriting fossil fuels such as coal and oil sands, though U.S. and Asian insurers have mainly retained their exposure.
The Lloyd’s Corporation and its members will end new investment in thermal coal-fired power plants, thermal coal mines, oil sands and new Arctic energy exploration activities from Jan. 1, 2022, Lloyd’s said in a statement.
It would phase out existing investment in companies which derive 30% or more of their revenues from those sectors by the end of 2025. Lloyd’s also said it was asking members to stop providing new insurance cover for thermal coal, oil sands, or new Arctic energy exploration from Jan. 1, 2022, with a target date of Jan. 1, 2030 to phase out the renewal of existing cover.