Lloyd's & Oxford Univ. report urges insurance industry to act on climate change to avoid stranded assets

Author: Chris Seekings, Actuary Magazine, Published on: 1 March 2017

"Action needed to avoid climate change leaving insurance industry with ‘stranded assets’", 27 Feb 2017

Insurance companies worldwide could face unanticipated asset write-downs or conversions to liabilities as a result of climate change, according to a report from Lloyd’s...[The study] argues that firms should stress test portfolios to evaluate their assets’ exposure to the effects of climate change and the devaluating impact it could have on them. It urges closer involvement by investors in the governance processes of businesses in which they invest, playing an active role in the development of legislation and regulation around environmental policy…The study involved Lloyd’s, in partnership with the University of Oxford’s Smith School, creating eight detailed scenarios in whereby assets could become ‘stranded’… If these hypothetical situations were to come to pass, they could potentially strand entire regions and global industries within a short timeframe, according to the report. It adds that businesses should screen their investments based on environmental characteristics, and divest from projects that do not consider the impacts of climate change…

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Related companies: Lloyd's of London