Lloyd's and MIGA Join Forces for Climate Action
Lloyd's, the distinguished insurance and reinsurance marketplace based in London, has proudly announced a strategic alliance with the Multilateral Investment Guarantee Agency (MIGA), part of the World Bank Group.
This partnership is set to propel MIGA's guarantee issuance towards an ambitious US$20bn annually by the year 2030, significantly leveraging Lloyd's reinsurance capabilities to bolster sustainable development ventures within emerging markets.
This collaboration, unveiled at Climate Week NYC, nurtures a 25-year legacy of cooperative efforts between the two entities. It underscores a shared dedication towards fostering sustainable development outcomes through the vehicle of World Bank Group guarantees, aimed at alleviating risks for cross-border investments in developing countries.
Amplifying reinsurance
MIGA's introduction of the World Bank Group Guarantee Platform is poised to be instrumental in achieving the US$20bn target. This inventive platform will depend substantially on collaborative efforts with reinsurance partners to broaden its capability for extending investment guarantees.
Lloyd's CEO John Neal emphasises the impact of the partnership: “Through our ongoing partnership with MIGA, the (re)insurance industry is facilitating projects around the world which are having a tangible impact on the local and national communities that need it most.”
Thanks to the reinsurance capacity provided by Lloyd's market, MIGA can enhance its investment guarantee scope, offering wider coverage for development projects in emerging nations, thereby beckoning more productive foreign investments to these shores.
Guarantees geared toward climate
As part of the announcement, MIGA has announced a US$1.2bn guarantee to Banco do Brasil SA, Brazil's largest state-owned bank.
This guarantee is designed to bolster a loan aimed at local lending for farmers engaged in climate-smart agricultural practices, including no-till agriculture.
Supported by 15 reinsurance partners, this guarantee showcases the crucial role of private capital in fostering such environmentally conscious projects.
Shaping sustainable agriculture in Brazil
The Banco do Brasil initiative stands as a beacon of the potential impact MIGA's guarantees can usher in. Aimed at increasing financial access for micro, small and medium farmers, this project promotes sustainable agricultural practices to tackle global climate change and deforestation challenges within Brazil.
The initiative estimates that roughly 1.8 tonnes of greenhouse gas emissions could be averted per hectare each year through the adoption of no-till farming, simultaneously curbing social and environmental expenses incited by soil erosion and enhancing resilience and adaptation against climate shocks.
Expert insights from World Bank conservation specialists alongside MIGA's climate and gender teams have enriched the project, ensuring a holistic approach towards development impact, incorporating considerations around harmful child labour, forced labour, pesticide use, biodiversity depletion and impacts on indigenous populations engendered by agriculture.
Cross-sector alliances
MIGA's recent strides towards climate change mitigation are reflected in its last fiscal year's undertakings, issuing guarantees that supported climate change mitigation or adaptation in 30 projects spanning 22 countries.
Hiroshi Matano, MIGA Executive Vice President, adds: “MIGA's long-running collaboration with the Lloyd's marketplace is bringing significant benefits to both investors and host countries.
“Investors are gaining access to larger levels of coverage for projects in developing countries, and host countries are benefiting from higher levels of productive foreign investment.”
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