Lloyds of London is facing pressures from climate change campaigners, its new coal divestment policy, which entered effect on 1 April, has been branded as “ducking responsibilities to the market”.
Lloyds Corporation, which oversees the Lloyds market, announced in November last year that it intends to implement a coal exclusion policy to assets held in segregated portfolios of its Central Fund Investments. It has not yet confirmed how it intends to define the criteria for divestment and exclusion.
Climate change campaign group Unfriend Coal has challenged the decision, highlighting that it affected only £2bn of its £77.5bn assets and that Lloyds syndicates continued to invest in coal. The group also pointed out that Lloyds made not commitment to divest from companies building new coal power or to divest from controversial projects such as tar sands and arctic drilling, which have been added to the red list by other insurance firms.
Alice Garton, ClientEarth’s Company and Finance Lead commented on the decision: “Lloyd’s could and should be going so much further. This policy only applies to a fraction of the capital which underpins the market. Ultimately, it is the responsibility of Lloyd’s, and not just individual managing agents, to manage the stranded asset risks posed by coal. If either fail to do so, these risks will remain a threat to the stability of the market.”
Lloyds has faced a challenging financial year in 2017 due to an increase in natural catastrophes leading to €5.1bn in claims, as a result, the insurance giant faced a pre-tax loss of €2.3bn,
Other industry names, including Generali, AXA and Allianz have committed to a partial or even complete divestment from fossil fuels, although all but AXA continue to act as underwriters and remain invested in coal through third party assets.