On 23rd November 2023, Lloyd's launched a consultation on its 3-year roadmap for insuring the transition to a lower-carbon economy.
This acknowledged that effectively planning and executing on transition is one of the greatest challenges businesses will face in the coming years, with the roadmap suggesting milestones through 2026 for underwriting, exposure management, capital & reserving, and investments. A first market survey is imminent, aiming to assess the capabilities and maturity of managing agents' approach to climate change.
Lloyd’s has provided these agents - who manage underwriting syndicates - with an open-source Client Transition Plan Credibility Framework to help structure discussion and understand a client's alignment to net zero.
Preliminary results from the consultation suggest that early adopters of the tool find no evidence of credible transition plans in the fossil fuel sector, which is reducing its lower-carbon investments while boosting dividends. As a result, underwriters are unwilling to carry the risk. In a shrinking market, investments in new fossil fuel sources look especially vulnerable.
