Letter to the Society of Lloyd’s on deficiencies in its climate change guidance

The Society of Lloyd’s has issued environmental, social and governance guidance to Lloyd’s managing agents, and has publicly committed to transition the Lloyd’s market to net-zero emissions by 2050.

This letter to Lloyd’s sets out why Lloyd’s ESG guidance is wholly inadequate to set the Lloyd’s market on a science-based pathway to net zero. In particular, the guidance:

• is not binding on managing agents, leaving them free to disregard the guidance and Lloyd’s stated net-zero ambition;
• lacks transparency, as individual managing agents and syndicates will not need to disclose their climate targets or progress;
• does not set any targets for short or medium-term emissions reduction, which allows managing agents to take little or no meaningful action in the near future; and
• does not set any targets for phasing out cover for fossil fuels, and in fact rows back from Lloyd’s previous public commitments to phasing out cover for coal, tar sands and Arctic oil.

As a result, Lloyd’s publicised net-zero ambition risks being greenwash, and Lloyd’s risks breaching its legal duties to manage the market’s exposure to climate risks.

We previously wrote to Lloyd’s on 14 June 2021 summarising its legal duties in relation to climate change. We wrote again on 3 November 2021 calling on Lloyd’s to make its ESG guidance publicly available and summarising Lloyd’s legal duties not to make misleading statements about its action on climate.