Lloyd’s, Moody’s Partner On Carbon Accounting Solution For Underwriting & Investment Portfolios

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Insurance and reinsurance marketplace Lloyd’s and Moody’s Analytics announced the launch of a new collaboration aimed at developing a greenhouse gas (GHG) emissions accounting solution enabling managing agents to quantify underwriting and investment portfolio emissions and to meet emerging regulatory requirements.

According to Lloyd’s, the new solution is being developed as insurers face the challenge of meeting GHG emissions reporting requirements from current frameworks such as Streamlined Energy and Carbon Reporting (SECR), as well as other regulations coming into force such as the EU’s Corporate Sustainability Reporting Directive (CSRD) and the  International Sustainability Standards Board (ISSB).

Rebekah Clement, Director of Corporate Affairs at Lloyd’s said:

“A robust and credible emissions measurement process will allow us to meet our regulatory reporting requirements while improving transparency across the Lloyd’s market. Moody’s have established expertise in this field and are well placed to help us achieve this.”

Under the new collaboration, Lloyd’s and Moody’s will develop a solution aimed at accurately assessing Scope 3 emissions defined by the Greenhouse Gas Protocol’s 15th category, or those associated with investments and financing activities. Scope 3 emissions are typically the most difficult to track, given limited availability of data and external company disclosures.

Andy Frepp, General Manager – Risk Solutions at Moody’s Analytics, said:

“Building on our unique experience in delivering specialised sustainable solutions and analytics to brokers, carriers, and reinsurers, we are excited to help the Lloyd’s market quantify its insurance and financed-associated carbon emissions by leveraging our extensive carbon and financial data, advanced name-matching algorithms, and the knowledge of our climate and insurance experts.”

The collaboration will begin with a 12-week proof of concept exercise as part of Lloyd’s “Lab Challenge Programme,” which has been established to experiment with new product ideas and accelerate product development to tackle insurance industry challenges. The starting point for the solution’s emissions measurement will be the Principles for Carbon Accounting Financials (PCAF) standards. The PCAF launched its Global GHG Accounting and Reporting Standard for Insurance-Associated Emissions last year, designed to enable insurance and reinsurance companies to measure and disclose GHG emissions associated with their underwriting portfolios.

Dawn Miller, Commercial Director at Lloyd’s, said:

“A regulatory imperative is coming within the next three years, and the Lloyd’s Lab can play a useful role by helping the market get to a better, swifter, and more consistent outcome.”

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