Sandy Trust, Chair of the IFoA Sustainability Board provides an update on his themes for the next year.
As I take on the role of Chair of the IFoA Sustainability Board for the 2021/2022 session the two words that come to mind are excited and daunted. Excited because of the potential that the profession has to influence the global financial system, which in turn has a great impact on the future we will all live in. Daunted as I follow in the footsteps of previous chairs and many, many passionate volunteers who have worked tirelessly to progress sustainability within the profession. I wanted to share some thoughts on the opportunity for actuaries to play their part in building a sustainable future for us all and my chair themes for the year, which are focused on empowering actuaries to take action in their professional lives on the daunting sustainability challenges we face into.
The Opportunity for Actuaries
Actuaries are pivotal in pensions and insurance, and increasingly in banking. These are all industries that directly influence what the future will look like, as they determine what activities are financed and insured.
But making a difference requires a mindset shift for us. It requires us to consider not only the direct financial impact of our decisions but also the broader, real-world impacts that can have long-term effects on our customers, shareholders and wider society. It requires us to consider the financial system not as separate from the wider Earth system, but as intricately linked to it. Money simply cannot put right the fundamental changes that climate change or biodiversity loss will bring after it is too late – but the financial world can help keep it from getting too late, as well as building a fairer and more equitable future.
We will need to adapt our actuarial toolkit to embrace new concepts like systems thinking, sustainability, risk interconnectedness and net zero. We will also need to evolve our sense of responsibility, recognising that we wield great power through the decisions we oversee in the global financial system – power to make choices today that will have far reaching and profound implications for the generations of tomorrow. Now is the time to update our operating manual and incorporate long-term sustainability into the tenets of the profession.
We actuaries have an immense opportunity. We can play a part in securing a sustainable future, in ensuring pensioners, policyholders and society at large will have a world worth living in. And we must choose to do so by taking action.
Taking action on sustainability
Taking action requires a mindset for action. Mindset is driven by culture, incentives and education. For this reason my leading theme is around cultivating a mindset for action, accompanied by a continuing focus on two of the big challenges we face into.
My three chair themes for the year are:
Empower individual actuaries to take action on sustainability and inequality to deliver system change:
- Support personal empowerment and illustrate individual actions to support sustainability, including championing diversity and inclusion. Explore the creation of an individual “sustainability pledge” (based on Terra Carta) for actuaries to play their part in creating a sustainable and just future.
- Continue to develop methodologies (practical guides), education (courses and curriculum) and case studies to encourage individuals to take action
Mainstream climate change into actuarial thinking, including net zero and Just transition:
- Ensure that climate risk considerations are integrated into every piece of actuarial work as naturally as interest rate or mortality risks;
- Encourage actuaries to think beyond climate risk to net zero and the Just Transition and to incorporate delivery of both into actuarial advice.
Accelerate action on biodiversity – so that nature positive sits alongside net zero:
- Continue to develop thought leadership and methodologies on biodiversity, educating and equipping actuaries to broaden their remit to include ‘nature positive’ solutions.
- Be a force to realign the financial system from unsustainably exploiting the planet and society to a financial system that sustainably supports the planet and hence society – working collaboratively with new economics, systems thinking and other stakeholder groups.