In a reversal of previous pledges, the historic Lloyd’s of London institution will not stop insurers from covering fossil fuels, including coal.
Patrick Tiernan, who took over as chief executive officer of the world’s oldest insurance market in the spring, told the Financial Times that the organization plans to give “more freedom” to insurers trading at the marketplace.
Back in 2020, Lloyd’s outlined a “plan for becoming a truly sustainable insurance marketplace”, setting targets for responsible underwriting and investment for the first time, “to help accelerate society’s transition from fossil fuel dependency, towards renewable energy sources.”
At the time, Lloyd’s pledged it would start to phase out insurance cover for, and investments in, thermal coal-fired power plants, thermal coal mines, oil sands, or new Arctic energy exploration activities.
From January 2022, Lloyd’s managing agents were asked to no longer provide new insurance coverage or investments in these activities.
However, Lloyd’s new boss Tiernan is abandoning this policy, amid a wider trend this year of financial institutions ditching net-zero alliances.
“Lloyd’s strength is that it’s apolitical. It’s important we don’t wade into issues we don’t need to,” Tiernan told FT.
The U.S., especially after the inauguration of President Donald Trump for his second term in office this year, has seen a backlash against financial institutions and fund managers that had plans to reduce their exposure to coal, oil, and gas.
The United States is the biggest market for Lloyd’s accounting for around half of its business.
Lloyd’s new stance comes after the North American banks and asset managers began quitting net-zero alliances en masse following President Donald Trump’s election victory. The top U.S. banks and four of Canada’s largest banks are no longer part of the Net-Zero Banking Alliance (NZBA), a group of leading global banks committed to aligning their lending, investment, and capital markets activities with net-zero greenhouse gas emissions by 2050.
By Tsvetana Paraskova for Oilprice.com
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