Lloyd’s of London, the world’s leading insurance platform, will end investments in thermal coal-fired power plants, thermal coal mines, oil sands and new Arctic energy exploration activities in one year's time.

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The move — part of a new environmental, social and governance strategy — will see the platform stopping new investments in these areas by Lloyd’s market participants and (by the itself) from 1 January, 2022.

BY the end of 2025, Lloyd’s also plans to have phased out existing investments in companies with business models that derive 30% or more of their revenues from thermal coal-fired power plants, thermal coal mines, oil sands or new Arctic energy exploration activities.

Managing agents in the Lloyd’s market will be asked to no longer provide new insurance cover for these four categories of fossil fuel investments from the start of 2022.

However, to enable the market to support customers as they transition their businesses, the target date for phasing out the renewal of existing insurance cover for these types of businesses is 1 January, 2030.

This deadline also relates to those companies with business models which derive 30% or more of their revenues from any of these activities.

“Lloyd’s will consult with the market and policyholders and provide ongoing support and guidance during this period of transition,” it said.

It hopes these initiatives will help accelerate society’s transition from fossil fuel dependency towards renewable energy sources.

These details emerged from a report published on Thursday by the organisation that sets out its plans for “accelerating the transition to a more sustainable insurance and reinsurance marketplace".

Lloyd’s new strategy is designed to align with the United Nations’ Sustainable Development Goals and support the principles set out in the Paris Agreement.

This is the first time that Lloyd’s has announced publicly accountable targets for responsible underwriting and investment, which it said have been developed “following feedback from and in consultation with Lloyd’s market practitioners".

In the run-up to the UN Climate Change Conference, to be held in Glasgow in 2021, Lloyd’s will also consider how else the insurance sector can best support the global effort to address climate risk and respond to the UK government’s green industrial revolution.

In another ESG initiative, Lloyd’s said it will “encourage” all insurance undertakings in its market to allocate 2% of annual premiums towards innovative and sustainable products by 2022 and will also provide guidance to deliver on this ambition.

In addition, the organisation will launch a risk centre in 2021 to undertake research into new insurance products to protect society from systemic risks, including those related to climate.

Commenting on the moves, Lloyd’s chairman Bruce Carnegie-Brown said: “This is the first time we have set an ESG strategy for the Lloyd’s market and it represents an important milestone on the journey towards building a more sustainable future.

"We recognise that the targets we are setting will be challenging but ... we will work closely with our market and customers to help them plan for these changes as we implement a long-term managed programme towards sustainable, responsible underwriting.”

Andrew Brooks, chairman of the Lloyd’s Market Association added: “As a market we must act decisively now and play a more effective and proactive role in supporting positive societal change.”

Insure Our Future (IOF), a campaigns group against insurance companies supporting fossil fuels through insurance products and via investing their premiums, gave a cautious welcome to the move, but said Lloyd’s needed to move faster.

It also hoped the strategy would stimulate laggard American insurers to up their game when it came to exiting the fossil fuels sector.

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Lindsay Keenan, IOF’s European coordinator, said: “We welcome Lloyd’s new policy …as a step in the right direction. However, the policy should take effect now, not 2022.

“Additionally,” she said, “the target date for Lloyd’s to phase out existing policies should be January 2021 for companies still developing new coal and tar sand projects", stressing that Lloyd’s 2030 deadline “is not justified by climate science and the urgent need for action".

Elana Sulakshana, energy finance campaigner at the Rainforest Action Network, added: “Lloyd’s is sending a message to the US insurance industry that it cannot continue its unchecked support for climate-wrecking projects under the Lloyd’s name."

She said Lloyd’s announcement highlights the ever-growing gap between US insurance companies and their global peers on climate action.

Lloyd’s market is estimated to have accounted for about 40% of the total global energy insurance premium in 2018, according to IOF.

Lloyd’s is a market consisting of more than 50 insurance undertakings, over 200 registered broking firms and a global network of more than 4000 local cover holders.