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Opinion: Royal pressure for industry action on climate

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Last week, a Royal visit to 1 Lime Street heralded a fresh commitment from the (re)insurance industry to building a more sustainable future.

Prince Charles convened the first meeting of the Insurance Task Force under his Sustainable Markets Initiative, which saw heavyweight industry executives pledge to be “a catalyst and platform for action” to drive towards a net-zero economy – both via the risks their companies manage and protect, and the capital they invest.

The move brings the (re)insurance industry in line with the rest of financial services, which collectively launched its own taskforce in February under the same Prince of Wales initiative, as well as other sectors.

First and foremost, the convening of this task force needs to be applauded as a cross-industry commitment to tackling climate change and building resilience. An issue as systemic and all-encompassing as sustainability requires collaboration and collective financial might.

It will also complement efforts from Axa’s Net-Zero Insurance Alliance and the Insurance Development Forum on the industry’s approach to this topic.

In the past 18 months, we have seen countless pledges and promises on ESG and sustainability. But from the outset, this particular initiative carries a gravitas lent by royal associations.

The roster of committed executives is also a statement in itself.

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The launch of the task force came with the expected (and pared-back) ceremony, with a double ring of the Lutine Bell and rallying speeches from Prince Charles and Lloyd’s chairman Bruce Carnegie-Brown.

However, the industry and its ESG critics will want to see that all of this is more than just pomp.

Cynics will see this as a well-timed PR exercise. Lloyd’s in particular has been a target for climate activists, with very public demonstrations outside 1 Lime Street and calls for Lloyd’s to go further and faster on the targets it has outlined in its own ESG strategy.

Outside of Lloyd’s, executives themselves are also personally under fire from activism, as are the companies they run. Arguably, the industry has never been under so much external pressure to demonstrate green credentials and put money where its mouth is.

A cross-industry commitment with a royal seal of approval certainly is a statement to counteract that pressure. But now we need to see that this truly is a mechanism which can drive change.

Lloyd's will chair the taskforce, and this is another demonstration of the Corporation having more confidence in both its own voice and its role as a convener and ambassador of the global (re)insurance industry.

The action points in the statement of intent give an element of transparency, and we would hope that the task force provides regular updates on its progress to drive accountability.

The objectives are crafted in a way which would suggest industry buy-in.

Within the insurance industry there has been much debate around how to support a sustainable future, and much of this discussion has focused on the phase-out of fossil fuel underwriting – where real questions remain on how to be fair to existing energy clients, and how to support coal or oil-reliant economies unable to obtain insurance.

Certainly, in the Lloyd’s market there has been quiet grumbling around the practicalities of executing on the Corporation’s ESG underwriting targets.

By contrast, the actions outlined by the task force are additive rather than punitive – focusing on innovation and investment, rather than exclusions and withdrawals.

This should encourage less in-fighting, and more fire-fighting on the topic of climate change.

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In his speech to the Underwriting Room, the Prince of Wales said he had tried to indicate to the (re)insurance industry over a “considerable number of years” that the scale of the challenge created by new types or scales of climate-related events could not be underestimated.

“My sincere hope is that the industry will rise to these challenges and regard them as opportunities, and that it will avoid the temptation to restrict coverage but, rather, innovate new products,” he said.

Lloyd’s chairman Carnegie-Brown said the Prince would “hold feet to the fire” on the actions the task force has committed to.

Now we need to see that the gravitas of the launch is matched with appropriate accountability from the task force, and that the initiative can be a genuine force for change, not just a photo opportunity.

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