Joint Forum on Actuarial Regulation publishes climate change deep dive
News types: Guidance, Policies and Responsibilities, Publications
Published: 28 June 2022
The Joint Forum on Actuarial Regulation (JFAR) has today published an extensive report on understanding the science of climate change.
The first of its kind report, which is a unique collaboration between regulators with an interest in actuarial work (FRC, IFoA, FCA, TPR, PRA), highlights the urgency of climate change and the role actuaries have to play in mitigating its risks.
The report is designed to address gaps in actuaries’ knowledge of the science behind climate change, giving actuaries confidence to increase their contributions on this important topic. It includes analysis of:
- Global temperature changes and the impact of mass human migration, rising sea levels and its impact on the UK and Europe specifically and implications for food security and human mortality.
- The interconnectedness of biodiversity and climate change.
- Tipping points - a critical threshold beyond which a system reorganises abruptly and irreversibly. Many of these tipping points such as effects in the Arctic and Antarctic regions will be familiar, but there are other tipping points such as the effects on ocean circulation, permafrost thaw, and forest dieback, which are less well-known but equally important.
- Efforts to mitigate climate change, the concepts of carbon budgets and net zero.
The report will also be an important reference tool for professionals wanting to increase their knowledge of climate change and the science behind it.
The FRC’s Executive Director of Regulatory Standards, Mark Babington said:
“Actuaries have a significant role to play in addressing and mitigating the risks of climate change. This report, which is an important cross-regulatory collaboration, is designed to provide actuaries and other professionals in the financial services sector with a toolkit to understand the science behind climate change. Actuaries should take action to familiarise themselves with this resource and appropriately apply it to their work.”
David Fairs, The Pension Regulator’s Executive Director of Regulatory Policy, Analysis and Risk, said:
“From worsening storms to increased risk of fire and flood, this report on the science of climate change makes for shocking but essential reading. All pension schemes, regardless of size, are highly likely exposed to climate-related risks and opportunities. Trustees already have access to our guidance in this area but will also need the support of skilled, competent and knowledgeable advisers. We welcome work to help improve actuaries’ understanding of climate-related risks and opportunities, so they are better equipped to help trustees manage, and ultimately protect, savers’ retirements.”
Neil Buckley, Regulation Board Chair at the Institute and Faculty of Actuaries (IFoA), said:
“The IFoA has a broad range of guidance and resources to support members in considering climate-related risk as part of their work and as an organisation, we have committed to be net-zero by 2030. As a member of JFAR, we believe this report represents another valuable resource to help actuaries better understand and communicate the ecological, social and economic impact of climate change, and the world-changing, systemic risks it presents.”