The first London Climate Action Week is being held on 1-8 July 2019. Louise Pryor, outgoing* Chair of IFoA’s Resource and Environment (RE) Board, discusses the unique opportunity for London to play a leading role in addressing climate change.
London is a world centre for politics, culture and transport. It is also a city with a rich financial history – it flourished financially in Roman times and has grown to enjoy a leading position as a financial centre today, maintaining the largest trade surplus in financial services in the world. However, many of the factors that attract and retain business and investment are vulnerable to the risks posed by climate change.
In recognition of this vulnerability, London’s mayor, Sadiq Khan, declared a climate emergency in London late last year. Khan has been vocal about the need for action against climate change, calling on government ministers to, “..stop dragging your feet and gambling with our future and give London and cities across the UK the real powers and funding needed to protect our future generations.”
To support this declaration the mayor’s office has introduced a series of measures to tackle climate breakdown, including investing £500m in low carbon technologies and divesting pension funds from fossil fuels. The latest initiative is London Climate Action Week, which is being held from 1 to 8 July. It will bring together individuals and organisations with climate expertise and talent from a wide range of sectors to run events across the city focused on taking local, national and international action. These events will highlight the scaling up of practical solutions and identifying new solutions to help cut our carbon emissions to keep global temperature increases within 1.5C and support the Paris Agreement.
The role for London’s financial sector
The financial sector has an important role to play in addressing climate change, not least by mobilising the flow of private finance towards investment that supports the transition to the low-carbon economy. In the UK, the Committee on Climate Change (CCC) estimated the total investment needed to meet the UK’s fifth carbon budget at approximately £22 billion per year (1% of GDP), with only £2.2 billion of this to come from public investment. Unfortunately, green financing is not yet growing fast enough to support the required level of private investment – this financing gap is seen by many in financial services as both a challenge and an opportunity. To help address the challenge, the City of London Corporation and the UK government are jointly funding the Green Finance Institute, which champions sustainable finance in the UK and abroad.
Climate change poses risks to the stability of the financial sector, with many corporates failing to properly understand the potentially longer term impacts of transition and physical climate risk on their business. Another way in which organisations in the financial sector can help to address climate change is through disclosing exposure to climate-related risk – both by disclosing their own risk and by encouraging disclosure from other organisations. Consistent and decision-useful disclosures will help to support the growth of sustainable investment. The IFoA is a listed supporter of the Taskforce for Climate-related Financial Disclosures (TCFD) and considers its recommendations to be a useful framework for these disclosures and indeed for helping organisations to understand and mitigate climate-related risk. I recently participated in a joint webinar from the IFoA and the Institute of Environmental Management and Assessment (IEMA) which explored the recommendations of the TCFD from the perspective of actuaries and sustainability professionals, and considered how the two could work together. I participated alongside Steve Waygood, Chief Responsible Investment at Aviva Investors and member of the TCFD, Paul Pritchard, Senior Associate at Iken and IEMA fellow, and Nick Blyth, Policy and Engagement Lead at IEMA.
Getting involved in London Climate Action Week
The program for London Climate Action Week is full of engaging events covering a wide range of focus areas including culture and communications, business leadership, international collaboration, renewable energy and green finance.
I will be attending a London Climate Change Partnership (LCCP) Business Roundtable which will explore how resilient businesses in London are in the face of the physical and transition climate risks. The LCCP is the centre for expertise on climate change adaptation and resilience to extreme weather in London.
If you would like to do more to support the profession’s work on climate change and other RE issues, no matter where you are based, you can:
- Read the RE Board’s series of climate change practical guides for actuaries working in pensions. Practical guides for general insurance, life insurance and investment are expected to be published in coming months.
- Register your interest in R&E issues by logging into the profession’s website and amending your preferences.
- Attend one of the many R&E events organised by the profession.
- Volunteer to support the work of the R&E Board, its Research and CPD sub-committee, or one of its working parties.
*Louise Pryor’s term as RE Board Chair will finalise in July. Simon Jones, current Deputy Chair of the Board, will then commence in the role.