More than 80% of actuaries participating in a recent study conducted by the Institute and Faculty of Actuaries (IFoA) have said that their professional involvement in climate change and sustainability work has increased in recent years.
According to the IFoA thematic review report "Actuarial involvement in climate and sustainability work", actuaries are increasingly providing advice on this topic to firms and clients in insurance, pensions and investments, as well as wider fields such as banking. Specific areas to which actuaries contribute include stress and scenario testing, strategic asset allocation, sustainability frameworks, and physical and transition risk modelling.
The study, however, found that actuaries face challenges in communicating climate-related risks and opportunities. Among complaints were that climate and sustainability work is often driven by regulatory imperatives, and that firms’ budgetary constraints can affect the scope of such work.
Given evolving scientific research and a geopolitical background that threatens climate change consensus, the report pointed to “the critical importance of focusing on evidence-based analysis and research” and using professional judgment to apply it to potential future scenarios.
IFoA review actuary Alan Marshall said, “Climate and sustainability are defining issues of our time, and the skills of actuaries are making a difference in how we understand and manage associated risks across a range of domains.
“It is important that IFoA members are supported to continue work in influencing and leading activity in this area, and this review highlights key aspects where this can be enhanced.”