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Lloyd’s launches £250m private impact fund with Schroders

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Published: 17 April 2023

The fund is the first to be launched on Lloyd’s new investment platform, created as a vehicle to pool the collective resources of the insurance market’s investors.

The fund launched by Lloyd’s and Schroders will invest in climate mitigation and adaptation, the circular economy and social inclusion | The Lloyd’s Building, City of London by Michal Gadek on Unsplash.

Lloyd’s, the London-based insurance market, has launched the Lloyd’s Private Impact Fund for its investors, with an initial £250m allocation, with Schroders Capital as portfolio manager.

The fund is to focus on climate mitigation and adaptation, the circular economy and social inclusion via global investments across asset classes, in private equity, infrastructure, natural capital and real estate. It aims to generate both investment return and impact by targeting areas where the need for capital significantly exceeds supply in terms of global reach and climate adaptation. 

“The design of the fund is itself innovative, being open-ended in nature and categorised as an impact fund,” Eleanor Bucks, chief investment officer at Lloyd’s, said. 

The fund is the first to be launched on the Lloyd’s Investment Platform, created in 2022 to allow Lloyd’s market investors to invest collectively in a wider range of investment opportunities, including private assets. By pooling investors resources, the platform aims to improve value for money and create operational efficiencies. The Lloyd’s market is supported by some £95bn of assets invested globally. Schroders Solutions are Lloyd’s investment partners for the platform as a whole. 

Investments in the impact fund will be aligned to one of a number of UN Sustainable Development Goals (SDGs), which will provide “measurable social and/or environmental impact, alongside a financial return”, according to Ajeet Manjrekar, head of UK client solutions, Schroders Solutions.  

SDGs targeted include, among others, those related to poverty, gender equality, clean energy, sustainable communities and climate action. 

Key performance indicators will be set to measure and demonstrate progress and alignment to the principles for Article 9 funds under the EU’s Sustainable Financial Disclosure Regulation (SFDR). An Article 9 fund is one that has sustainable investment or a reduction in carbon emissions as its objective.  

“This is a great example of the impact that insurers can have in addressing climate change and reflects Lloyd’s convening role in leading the Sustainable Markets Initiative Insurance Task Force,” Bucks said. 

The taskforce, launched in 2021, is formed of leaders from some 20 insurers, including Axa, Hiscox, Legal & General and Munich Re, to provide support for the energy transition and provide better disaster protection cover in countries facing the worst effects of climate change. In August 2022, the taskforce launched a global supply chain pledge to drive greater sustainability across insurance industry supply chains. 

John Neal, Lloyd’s chief executive, said the insurance industry had a critical role in insuring risks associated with the energy transition and providing the investment to accelerate progress. 

“Lloyd’s has committed to be the insurer of the transition to net zero, providing both the capital and the capability to enable industries and economies to build a sustainable future,” he said. 

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