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Exclusive-Lloyd’s of London ups climate pledge, to push members on net zero -Breaking

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© Reuters. FILEPHOTO: On July 31st 2018, a man walks from Lloyd’s of London’s headquarters, in the City of London. REUTERS/Simon Dawson//File Photo

Simon Jessop, Carolyn Cohn

LONDON (Reuters – Lloyd’s of London stated on Thursday it would be joining peers in scaling down efforts to cut carbon emissions. The announcement came just days before international climate talks in Scotland.

Lloyd’s was long criticized by activists as being a slow-moving company on climate change. The syndicate leaves the decision on whether it will underwrite activities across a number of high-emitting industries to its members.

Lloyd’s has announced it joined the United Nations’ Net Zero Insurance Alliance, a group that aims to limit the sector’s carbon emissions and to cap global warming.

Lloyd’s joined because it committed to reducing all its attributable and operational greenhouse gas emissions to zero net by 2050. In order to take action quickly, the company will set interim science-based goals every five year and publish them.

One part of this effort would be to move the Central Fund’s 3 billion-pound ($4.12 trillion) Central Fund to net zero. This fund backstops member liabilities by switching over to green investments.

John Neal, Lloyd’s chief executive officer stated that “(We] are completely committed to working together across the financial industry to achieve its net Zero ambition.”

Lloyd’s sent a letter last week to its insurance companies titled “Dear CEO” to address the contentious topic of members’ activities. It warned them that they will need an environment, governance, and social plan for the second half 2022.

This comes on the heels of Lloyd’s’s inaugural ESG Strategy last year. It is years behind the leading European insurance companies and reinsurers.

“Lloyd’s will 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 by 2050 at the latest,” it said in the statement.

“These new formal expectations will be embedded into the Lloyd’s market oversight framework, putting climate action at the heart of annual business planning cycles with syndicates.”

It stated that Lloyd’s member’s ESG commitments will form part of the risk analysis process. This is done when Lloyd’s approves their annual business plans 2023. The members’ ability write business on the market can be affected by this.

Nigel Topping (UN High-Level Climate Action Champion), stated that net zero emissions requires transformation throughout the economy. He spoke at the COP26 climate negotiations in Glasgow, starting Sunday.

To enable that transition, and build resilience against climate shocks, insurance will be crucial.

“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.”

($1 = 0.7288 pounds)

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