Bruce Carnegie-Brown – Lloyd's climate

In a wide-ranging discussion on climate issues affecting Lloyd’s and the P&C industry, Carnegie-Brown said groups such as Extinction Rebellion, Insure Our Future and Coal Action Network have a positive role to play in the battle to combat climate change.

Speaking alongside Canada’s former prime minister Stephen Harper, the Lloyd’s chair said eco-activists were “clearly” needed as a means to challenge perceptions and bring about change.

“Reasonable people always find a way to adapt so you need unreasonable people to bring about change. And we clearly need some change in our perceptions about the impact of the way we behave in our everyday lives,” he told the RPC Global Access Conference, chaired by The Insurer’s managing editor Peter Hastie.

But Carnegie-Brown added that he felt single-issue campaigning is unhelpful, saying the challenges associated with climate change cannot be addressed on a “case-by-case basis”.

“The piece I slightly resist is that they tend to be single project focused so they find a project and make a huge case out of it and then they move on to another project,” he explained.

Lloyd’s chairman Bruce Carnegie-Brown

“I would much rather end up, certainly for Lloyd’s which is an aggregator of market activity and an important voice in the global insurance industry, with a risk appetite for carbon-intensive activity that reduces every year to get to net zero by 2050.”

Lloyd’s has been targeted by protestors on a number of occasions in recent years with activist groups calling on the market to stop underwriting and investing in fossil fuels, as well as individual projects such as the Adani coal mine, Trans Mountain pipeline, West Cumbria coal mine and the Cambo oilfields.

Carnegie-Brown – who earlier this year saw his mandate as chairman extended for a third term to June 2025 – has been a supporter of CEO John Neal’s strategy of positioning Lloyd’s more prominently as an industry climate change thought-leader.

This has seen Lloyd’s, in conjunction with HRH Prince Charles, launch the Sustainable Markets Initiative Insurance Taskforce. But it has also seen the market become a more obvious target for climate activists and their ire was provoked when Lloyd’s updated the market’s commitments on phasing out coverage relating to carbon-intensive energy projects.

In December 2020, Lloyd’s unveiled its first sustainability and ESG report in which it pledged to end new investment in thermal coal-fired power plants, thermal coal mines, oil sands and new Arctic energy exploration activities from 2022 and to phase out existing investment in companies that derive 30 percent or more of their revenues from those sectors by the end of 2025.

Lloyd’s also said it was asking members to stop providing new insurance cover for thermal coal, oil sands or new Arctic energy exploration from 2022, with a target date of 2030 to phase out the renewal of existing cover. But in July last year, the language was subtly changed as Lloyd’s recognised it did not have the power to order a change.

“I would much rather end up, certainly for Lloyd’s which is an aggregator of market activity and an important voice in the global insurance industry, with a risk appetite for carbon-intensive activity that reduces every year to get to net zero by 2050”

Carnegie-Brown acknowledged that the debate is complicated as the journey to net zero must recognise some societies’ greater dependence on traditional energy sources than others.

“We [the insurance sector] also accept that there are certain carbon-intensive risks that we will need to continue to take, whether that’s because the Polish economy is 70 percent dependent on coal and won’t get to net zero at the same pace as the United Kingdom, or whether it’s to recognise that the transportation industry will always be a net carbon user and therefore we need to move at a different pace than in other industries which can adopt different business models more quickly.

“That allows you to look at it much more holistically I think. That’s certainly the approach we’re trying to take at Lloyd’s,” he explained. 

Stephen Harper served as Canada’s 22nd Prime Minister

Lloyd’s was forced to cancel its in-person AGM this year after activists threatened to disrupt the event over criticism of the market’s ESG strategy. It came after Lloyd’s closed its entire One Lime Street building in April and told staff to work from other locations following a separate protest by Extinction Rebellion.

High-profile eco-activist protests against Lloyd’s

A further protest took place on the eve of the COP26 talks in October 2021, when activists set up a “climate justice memorial” on Lime Street. The memorial saw hundreds of flowers and floral wreaths laid outside Lloyd’s headquarters.

Carnegie-Brown said it is “reasonably clear” that most insurance executives were steering their businesses in a positive way.

“Most responsible [P&C] businesses are trying to move in a responsible direction and we feel the pressure not just from the activists but we feel it from our customers because we’re in their supply chain and they’re trying to manage their supply chain,” he said.

Carnegie-Brown was speaking ahead of Lloyd’s publishing the market’s aggregate H1 results, due on Thursday 8 September.

See our website for further coverage of the discussion, which included Harper’s scepticism on climate targets, criticism of government short-termism and why regulators should be doing more to help the industry in its own climate endeavours…