Twenty five years is a long time for an idea to come to fruition, but we finally got there: SolarAid’s partners Lloyd’s of London have agreed to divest from coal because of climate change.
This is excellent news – but it comes a couple of decades too late. Our Founder and Chair, Jeremy Leggett, first presented the case for divestment to Lloyd’s in September 1992. Back then he was the Scientific Director of the Climate Campaign at Greenpeace International and, after becoming acutely aware of the impending impacts of climate change, quickly saw the folly of investing in carbon intensive projects (such as coal mining and oil drilling) whilst underwriting extreme weather events that would be amplified by global warming.
Lloyd’s, he thought, might make the connection too. And it did not seem like a huge leap of faith that, once they had understood they were financing a process undermining their own business model, they might divest from coal, perhaps the other fossil fuels too, and back clean energy projects instead.
Over the Christmas break in December 1992 Jeremy wrote a report entitled “Climate Change and The Insurance Industry”. In February 1993 he presented it to in the main hall at Lloyd’s of London. As Jeremy describes in his book The Carbon War:
Richard Keeling, recently appointed to the Council of Lloyd’s, and Chairman for the seminar, met me at the door. “Don’t scare them too much,” he told me with a small grin as a hundred or so underwriters and agents filed into the mock-ancient lecture room in the heart of the ultra-modern building. “They have so much to worry about at the moment, poor dears.”
The report told them clearly:
“It would behove the industry to look very closely at where all capital is invested. Fossil-fuel-related operations should be eschewed, and solar energy and energy-efficiency projects favoured.”
The context had been set by some hard hitting facts:
In Hawaii during December, the Hawaiian Insurance Group – the State’s fifth biggest insurer – had announced that its huge losses meant it had to cease trading. Other Hawaiian insurers immediately issued an indefinite moratorium on the writing of new policies. First Insurance, Hawaii’s biggest insurer, announced that it would cease renewing existing policies as of 1st February 1993. 38,000 homeowners would then be stranded, without insurance for their homes. In Florida, things were just as bad. As the full extent of the losses from Hurricane Andrew became clear, amid bankruptcies among the smaller insurance companies, the state Insurance Commissioner pushed emergency legislation through, mandating $500 million in claims to hurricane victims who had been left stranded by the collapsed companies.
Then on December 10th, New England was hit by one of its worst-ever storms. Dubbed “The Great Nor’easter of 1992” by insurers, it flooded the New York subway, causing it to be closed down for the first time in its history. Hurricane-force winds, heavy rains, river and tidal flooding, and massive snowfalls caused $650 million in insured losses. The barrage dragged houses into the sea, wreaked havoc along 600 miles of coastline, killed at least 18 people, and caused a state of emergency to be declared in New York, New Jersey, and Connecticut.
No wonder the underwriters were listening that day a quarter of a century ago.
But they didn’t act then. Lloyd’s and other insurers carried on with business as usual. Jeremy was convinced though that the tide would turn in favour less carbon intensive activities, and to help speed that up he set about founding one of the UK’s first solar energy companies, Solarcentury. Solarcentury gave birth to SolarAid, with 5% of its profits, as soon as it reached profitability – after many struggles and almost going bankrupt – in 2006. SolarAid has now touched the lives of over 10 million Africans by providing solar lights in place of the toxic fumes of the kerosene lamp.
But the amount of money tied up in carbon investments was still keeping Jeremy up at night. How could it be sane for so many UK companies, and individuals (via their pensions) to hold so many fossil fuel investments, when they were so obviously going to backfire in the future, he worried.
In 2011, he joined forces with Mark Campanale, the Founder of financial think-tank Carbon Tracker, and Nick Robins to spread the news about the idea of ‘unburnable carbon’. Jeremy chaired Carbon Tracker and put all his influence behind the cause. It is probably largely thanks to Carbon Tracker’s excellent work, modelling the impact of assets becoming “stranded” (not worth much anymore!) that Lloyd’s have finally decided to exit coal investment.
Did it really have to take 25 years for them to act on that message?
It’s difficult not to wonder how the world might be different if they and other insurers had listened the first time round. The size of Lloyd’s, combined with their global reach and influence, would surely have made a difference to investment portfolios around the world, had they elected to lead the insurance industry in defence of their businesses in the 1990s, not the 2010s.
So after 25 years of campaigning, lobbying, fighting and writing, Jeremy can finally claim a victory in the ongoing carbon war. The battles will continue but it seems important to recognise the huge amount of effort and time which Jeremy has dedicated to this cause and, finally, that his dogged persistence, has paid off.
Campaigners everywhere should take note; you might not think you are winning, you might feel like you’re swimming against the tide, but if you stick to your guns with determination and passion, you might well succeed. It just might take a little longer than you imagined.
By the way, Lloyd’s of London is a supporter of SolarAid, which might come as a surprise for those readers who have made it this far! Thanks for that, all you underwriters. We do very much appreciate your generosity, notwithstanding our criticisms of your climate-change performance!