Lloyd’s outlines plans to increase green investment but stands before full alignment of the Paris Agreement
Insurance and investment giant Lloyd’s of London has released a new climate action roadmap detailing plans to step up support for low-carbon transportation, energy and industrial technologies.
Lloyds of London has been under pressure for several years to improve its approach to climate change
The roadmap unveiled today (July 29) builds on the company’s first comprehensive environmental, social and governance (ESG) strategy released late last year, as well as detailed plans to cease investing in coal, oil sands and the exploration of fossil fuels in the Arctic.
It sets out plans to expand investment in solutions that accelerate the transition to the low carbon economy in three high emission sectors: energy, transport and heavy industry.
Offshore wind will be a clean energy priority for Lloyds. This is perhaps to be expected given the UK Government’s commitment to provide 40 GW of offshore wind generating capacity by 2030. The roadmap also outlines plans to support nuclear power and blue and green hydrogen. Blue hydrogen is made with natural gas, with most of the emissions captured using artificial technologies, while green hydrogen is used to split water using an electrolyzer powered by renewable electricity.
As for transport, the roadmap includes the plans to implement the UK government’s transport decarbonization plan, which sets a net zero target for 2040 for domestic aviation and a net zero target for 2050 for international aviation. The plan prioritizes sustainable aviation fuels (SAFs) over electric aircraft, as does Lloyds’ roadmap. Lloyds has also announced its intention to accelerate the adoption of future marine fuels and more efficient ships and electric vehicles (EVs).
In relation to heavy industry, the roadmap outlines the potential of construction solutions such as offsite modular construction and low carbon materials, as well as technologies that can be retrofitted to improve the energy efficiency of buildings.
Lloyd’s said in a statement that it “has worked with a number of insurers, Lloyd’s market participants, brokers and companies in the energy, transportation and wider industries to understand the path to lower carbon footprint and examine the challenges that require insurance sector support “. “.
In particular, the document lacks temporary targets for the decarbonisation of Lloyds portfolios in these three sectors. These are to be announced at a later date, according to the roadmap. Before the end of 2021, Lloyds should publish a framework to accelerate and scale investments in “climate positive” solutions in developed and developing countries.
Aside from the outlines of technologies Lloyd’s would like to support, the roadmap outlines three areas of action Lloyds – and the broader global insurance industry – should take to address the climate crisis. These are groundbreaking new risk transfer solutions for emerging green innovations; Accelerating the transition to low carbon in high-emission and hard-to-reduce sectors by changing financial flows and collaborating.
On that last point, the roadmap states that the global insurance industry has a $ 30 trillion pool of capital that is not currently allocated to accelerate the transition to a low carbon economy. It also obliges Lloyd’s to ensure that at least 5% of the Corporation of Lloyd’s Central Fund is used for impact investments by 2022.
Lloyds Chairman Bruce Carnegie Brown said, “There is an increasingly pressing need for a coordinated global effort from all industries to bring about the tremendous change needed to address the climate challenge. Lloyd’s prides itself on playing a role with the global insurance industry in working with industries to provide risk management solutions and investments that help enable and accelerate the change needed and drive action towards a more sustainable world. “
Lloyd’s has been criticized by green groups for several years for insuring controversial projects like the Adani coal mine in Australia or the Trans Mountain oil pipeline in Canada, both of which have been rejected by indigenous groups.
These decisions were made at a time when many other major insurers in Europe were pulling out of coal and tar sands – or at least cutting back on investments, insurance and reinsurance. Companies like BNP Paribas, AXA and Zurich have taken this step.