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The UK’s Committee on Climate Change is an independent statutory body established under the Climate Change Act 2008.

Law, policy and regulation is evolving to manage climate change risk. This typically takes place in a national framework, although international networks promote knowledge-sharing and best practice.

The UK’s Climate Change Act 2008 became law over ten years ago. In June 2019 the UK passed net zero legislation committing the UK to a legally binding target of net zero emissions by 2050.

The UK’s Committee on Climate Change is an independent statutory body established under the Climate Change Act 2008. Its purpose is to advise the UK on emissions targets and to report to parliament on progress made in reducing greenhouse gas emissions and preparing for, and adapting to, the impacts of climate change.

France also has significant climate legislation, which extends into the financial sector. The French Sustainable Investment Forum (FIR,) has produced an Article173 Handbook. In New Zealand the Climate Change Response (Zero Carbon) Amendment Act 2019 sets out how a country highly dependent on agriculture is tackling climate change. National legislation reflects local circumstances. Whereas a lot of the focus in the UK has been on decarbonising energy, the agricultural sector is a prime focus for New Zealand.

Government support extends to education. The Green Finance Education Charter is a commitment from chartered and professional bodies (including the IFoA) to integrate green finance and sustainability into their core curricula, new qualifications, and the continued professional development of their members.

The Network of Central Banks and Supervisors for Greening the Financial System (NGFS) brings together a growing number of national central banks and financial regulators. At the time of writing, the US is notable for its absence. NGFS has published a number of reports, and climate scenario modelling is an early focus of its work. For example, you can find the NFGS paper on environmental risk analysis on the NGFS website.

There is a growing trend in climate change litigation. The Grantham Research Institute on Climate Change and the Environment and the Centre for Climate Change Economics and Policy have published Global trends in climate change litigation 2020 snapshot. Thomson Reuters Practical Law covers climate law. It is a commercial subscription service and actuaries could reasonably expect their legal departments to have access to it.

The environmental charity ClientEarth is active in using the law to reach climate goals. There is currently a case before the Australian courts (NSD1333/2018) in which a member of a pension fund is seeking confirmation from the trustees that they have taken specific actions to support their public statements on the risks of climate change. In the UK a pension fund member took a complaint to The Pensions Ombudsman that the fund would not provide all the information he had requested relating to how the fund was taking into consideration the potential risks of climate change.

In the UK the four principal financial regulators are developing their approach to the management of climate risk. This commenced publicly with the then-Governor of the Bank of England Mark Carney’s speech Breaking the tragedy of the horizon - climate change and financial stability in September 2015. The Bank of England Climate change page is a gateway to a number of resources including the 2015 insurance report and:

The UK government published its Green finance strategy in 2019.

The Prudential Regulatory Authority (PRA), part of the Bank of England, published its Consultation on its proposals for stress testing the financial stability implications of climate change in December 2019. This involves a Biennial Exploratory Scenario (BES) exercise. Although not formally a stress test, the objective of BES is to test the resilience of the largest banks and insurers to the physical and transition risks associated with different possible climate scenarios, and the financial system’s exposure more broadly to climate-related risk.

In March 2020 the FCA issued consultation paper CP20/3 Proposals to enhance climate-related disclosures by listed issuers and clarification of existing disclosure obligations. In October a Letter from the FCA to the Minister for Pensions and Financial Inclusion set out the FCA’s plans to implement consistent climate-related disclosure requirements for asset managers and FCA-regulated pension schemes, and also references the cross-Whitehall/cross-regulator climate taskforce.

The PRA and FCA co-convened the Climate Financial Risk Forum (CFRF), an industry forum that seeks to build capacity and share best practice across financial regulators and industry to advance the sector’s responses to the financial risks from climate change. In June 2020 CFRF published an extensive guide together with a summary Climate Financial Risk Forum Guide 2020.

In February 2020 the Financial Reporting Council (FRC) announced a review to assess company and auditor responses to climate change. More recently, the FRC published A Matter of Principles: The Future of Corporate Reporting.

The Pensions Regulator in the UK will be responsible for enforcing regulations yet to be issued for consultation, which will flow from the Pensions Bill currently before Parliament when enacted. Parts of the Bill deal with climate matters. The Bill should complete its passage through parliament in the autumn of 2020. In August 2020 the DWP published a consultation Taking action on climate risk: improving governance and reporting by occupational pension schemes. This consultation proposes TCFD making reporting mandatory for large pension schemes. It is also the government’s intention that scenario analysis will increasingly be seen as best practice in the strategic risk management of climate change. The consultation proposes that trustees will use two scenarios on a best efforts basis.

UK parliamentary Select Committees are considering climate issues. In 2018 the House of Commons Environmental Audit Committee held a Green Finance inquiry. This resulted in two reports, and the Committee also sent a letter to the UK’s 25 largest pension funds seeking information on how they were tackling climate change. The Committee published their response to this information. The Treasury Select Committee held a Decarbonisation and Green Finance inquiry over 2020.

In preparing for COP26, the UK has appointed Nigel Topping as UK Climate Champion, working alongside the Chile High-Level Champion from COP25.

The EU has been developing the overlapping areas of climate and sustainability policy and regulation for some years. The EU Taxonomy is a classification tool aimed at investors, companies and financial institutions to define environmental performance of economic activities across a wide range of industries, and sets requirements that corporate activities must meet to be considered sustainable.

The Principles for Responsible Investment’s (PRI) EU Sustainable Finance Taxonomy is one place to start. This Finextra briefing EU adopts green taxonomy gives a June 2020 update on the adoption by the EU parliament of the Taxonomy Regulation. An internet search will deliver many commercial providers offering analysis, advice and services around the taxonomy.

In Ireland the government published the Climate Action Plan in 2019. An LSE Grantham report Governance of climate change policy: A case study of South Africa states “South Africa has put in place one of the most elaborate and consultative climate governance systems observable among developing and emerging economies.” Columbia University’s School of International and Public Affairs has published an extensive Guide to Chinese Climate Policy_2019. The IEA has published China’s Emissions Trading Scheme, as China introduces a national ETS in 2020.

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Events calendar

  • The Growth Mindset for Actuaries

    13 October 2021 - 8 December 2021

    Fully booked.

    This practical course is aimed at actuaries at any stage of their career who want to develop their own growth mindset and apply it to their work setting and personal or professional lifelong learning. The content of the course builds on the lecture given by Dr Helen Wright on Growth Mindset as part of the President’s 2021 Lecture series, and will be delivered over a period of 2 months, from mid-October to early December.

  • Spaces available

    The role of actuaries within the health sector varies considerably from one country to another, due to differences in the local evolution of health systems and the funding models for health services. 

  • Spaces available

    This paper outlines key frameworks for reserving validation and techniques employed. Many companies lack an embedded reserve validation framework and validation is viewed as piecemeal and unstructured.  The paper outlines a case study demonstrating how successful machine learning techniques will become and then goes on to discuss implications.  The paper explores common validation approaches and their role in enhancing governance and confidence.

  • Spaces available

    Content will be aimed at all actuaries looking to understand the issues surrounding mental health in insurance and in particular those looking to ensure products and processes widen access for, and are most useful to, those experiencing periods of poor mental health.

  • Spaces available

    The IFoA Policy Briefing 'Can we help consumers avoid running out of money in retirement' examined the benefits of blending a lifetime annuity with income drawdown. Panellists, including providers and advisers, will look at the market practicalities of taking the actuarial theory through into the core advice propositions used by IFAs and Fund Managers. They will share a number of practical issues such as investment consequences before and after retirement and the level of annuity that is appropriate and answer questions from the audience.

  • Speech from the Governor of the Bank of England, Andrew Bailey

    Lincoln's Inn The Treasury Office, London WC2A 3TL
    1 December 2021

    The IFoA is pleased to be hosting the Governor of the Bank of England, Andrew Bailey, to deliver a speech on delivering policyholder protection in insurance regulation.

    The speech will be presented to an in-person audience, and simultaneously live-streamed, at 14.00 on Wednesday 1st December.

  • The Many Faces of Bias

    2 December 2021

    Spaces available

    This webinar looks at the many types of biases, both conscious and unconscious and the impacts they can have in the workplace.  Raising our own awareness and understanding of the issues can help us avoid the pitfalls of unconscious bias in particular.  We’ve all heard the phrase ‘office banter’ but are we sure that’s how those on the receiving end perceive it and is it ok to go along with it?

  • Spaces available

    Actuaries need to take action now - but how?  With a focus on climate change, this session will provide informed insight to enable you to improve your knowledge and understanding of the issues involved, demonstrate how it will impact advice to your clients, and highlight prospective opportunities for actuaries within pensions and wider fields.

  • Spaces available

    Pension scams have become more prevalent as a result of the pandemic, and Trustees have increased responsibilities to protect members, which means that actuaries need to be in a position to provide advice in this area. Our specialist panel will include a professional trustee, an IFA and head administrator, two of whom are members of PASA.

  • Spaces available

    The covid-19 pandemic creates a challenge for actuaries analysing experience data that includes mortality shocks.  To address this we present a methodology for modelling portfolio mortality data that offers local flexibility in the time dimension.  The approach permits the identification of seasonal variation, mortality shocks and late-reported deaths.  The methodology also allows actuaries to measure portfolio-specific mortality improvements.  Results are given for a mature annuity portfolio in the UK

  • Spaces available

    In this webinar, the authors of the 2021 Brian Hey prize winning paper present a new deep learning model called the LocalGLMnet. While deep learning models lead to very competitive regression models, often outperforming classical statistical models such as generalized linear models, the disadvantage is that deep learning solutions are difficult to interpret and explain, and variable selection is not easily possible.

  • Spaces available

    The dominant underwriting approach is a mix between rule-based engines and traditional underwriting. Applications are first assessed by automated rule-based engines which typically are capable of processing only simple applications. The remaining applications are reviewed by underwriters or referred to the reinsurers. This research aims to construct predictive machine learning models for complicated applications that cannot be processed by rule-based engines.

  • Spaces available

    With the Pension Schemes Act 2021 requiring a long term strategy from Trustees and sponsors, choosing a pensions endgame strategy has become even more critical. However, it is important that the endgame options available are adequately assessed before choosing one. With an ever-increasing array of creative and innovative options available, this decision may not be straightforward.