Lloyd’s Receives Poor Ratings in Insurance Sector ESG Assessment

ShareAction, a British investment activism group, has criticized Lloyd’s of London for its low marks on environmental and social responsibility. The group has suggested imposing new regulations on the historic insurance marketplace if it does not improve its policies. ShareAction wants to see the British financial industry prioritize adequate protection for both society and the planet, and recently reviewed the nation’s large insurers, including Lloyd’s, to assess their social responsibility and climate policies.

Despite Lloyd’s having voluntary ESG guidance for its managing agents, ShareAction found that it falls short of other institutions’ recommendations. Managing agents who follow Lloyd’s voluntary rules precisely would receive a low score of 13/100 on ShareAction’s assessment. The market’s voluntary guidance, which recommends joining an ESG alliance that Lloyd’s has since departed from, dates back three years. ShareAction has called for a commitment from Lloyd’s to phase out carbon-intensive elements of the business, such as underwriting ventures in thermal coal and offshore oil and gas.

The responsibility for improving social responsibility and climate policies lies with the managing agents at Lloyd’s, as they each run an independent book of business. ShareAction found that nearly half of the managing agents received an “extremely poor” grade for not setting any net-zero targets for their underwriting business. The group also noted that ESG factors are rarely tied to management compensation in the insurance industry, which could lead to climate targets being marginalized in practice. ShareAction suggests that if Lloyd’s does not improve its policies, legislation and regulation may be necessary to mandate specific requirements for its agents.

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