Lloyd’s of London under pressure to push out coal

Lloyd’s of London, is under increasing pressure to back away from supporting the coal industry.

The insurance giant has been petitioned by coalition group Unfriend Coal and legal activists ClientEarth to go much further to divest from the industry. Despite Lloyd’s recent announcement to remove coal companies from its investment strategy, ClientEarth points out the fund involved, “represents just 2.5% of assets for which Lloyd’s has oversight”.

Lloyd’s of London is unique in that it doesn’t insure companies directly, but runs a marketplace for others to join together and assess risk.

The letter goes on to say that the majority of the capital for which Lloyd’s supports “remains potentially exposed to coal related risks, such as stranded asset risk, through both the underwriting and investment in coal business”.

To take more meaningful action, ClientEarth recommends Lloyd’s changes its rules to make other insurers operating within its market stress test coal operators. This would lessen the chance of these assets becoming unviable, or stranded, in the future.

“Coal operations have the potential to create outsized risks, consuming extensive amounts of capital to satisfy property losses, business losses and litigation exposures”, said ClientEarth lawyer Alice Garton, “Lloyd’s has an opportunity to champion and consolidate the insurance industry’s view that underwriting and investing in coal is both risky and unprofitable.”

In addition, Lloyd’s has been lobbied by the Unfriend Coal coalition, which includes six environmental organisations - ClientEarth, Greenpeace, InfluenceMap, ShareAction, the Sunrise Project and 350.org.

The coalition is calling for the extension of Lloyd’s exclusion policy to “all companies which derive at least 30 percent of their business from coal”.

Peter Bosshard, the coordinator of the Unfriend Coal campaign, said: “By adopting best industry practices in its coal exclusion policy, Lloyd’s can confirm its reputation as an environmentally responsible actor and avoid that its member companies undermine the shift of other insurers out of the coal sector.”

 

Photo: Leio McLaren