The financial services industry has a vital role to play in meeting the Sustainable Development Goals (SDGs). Whilst policymakers often focus on the roughly £150 billion worth of official development assistance, there needs to be an increased focus on the £300 trillion of capital in the global markets. If this £300 trillion is harnessed to support, rather than undermine, sustainable development globally it could be transformative in achieving the Goals.
Here is a list of useful resources from academics, businesses, industry bodies and supranational organisations that are engaging with the SDGs and considering how financial services can respond. Though this is not an endorsement of these reports, these will be of interest to those considering the role of the financial industry and the SDGs. As such, we have provided links to the full reports and summarised the most salient points from an actuarial perspective. If you would like to recommend any additional resources for this list then please send them to us, along with a summary, to email@example.com.
ClientEarth (2017) Risky Business: climate change and professional liability risks for DB pensions actuaries and DB investment advisers
The ClientEarth reports highlight the legal and professional responsibilities of actuaries and investment consultants advising UK defined benefit pension schemes in relation to climate change. They illustrate some of the liability risks that actuaries and their clients may face if they fail to consider broader sustainability issues. The reports draw on the Pensions Regulator’s 2017 guidance, which clarified that DB pensions trustees should assess the materiality of climate change.
EU High-Level Expert Group on Sustainable Finance (2018): final report on sustainable finance
The aim of this group is to make sure that capital flows towards sustainable projects and serves society’s long-term goals. As the first priority it is working on changing the investment culture and behaviour of all market participants. This includes providing more financial and other incentives to choose and offer green products. The IFoA responded to its July 2017 consultation, stating that we need an appropriate price on carbon and an end to fossil fuel subsidies, as well as mandating fiduciary duty to consider ESG factors and improving financial disclosures.
Read the final report of the High-Level Expert Group on Sustainable Finance
International Actuarial Association a Discussion Paper on Climate Change and Mortality
This IAA paper was produced to raise awareness, among actuaries and others, of the likely long-term effects of climate change on mortality around the world. It includes:
- some of the leading research in this area
- the possible impacts on the global population and compares vulnerable populations with those covered by insurance and retirement programs
- mitigation/adaptation efforts that have the potential to affect human health and life, both in adverse and favourable ways
- possible quantitative modelling approaches to assess the net effect of climate change on mortality
Principles for Responsible Investment (2017): The SDG Investment Case
The Principles for Responsible Investment (PRI) considers 13 of the 17 SDGs directly investible (SDGs 1, 2, 3, 4, 5, 6, 7, 9, 11, 12, 13, 14 and 15) with the others either being Goals where the financial sector can assist in positive transformation (SDGs 8 and 10), or where the goals support positive financial activity (SDGs 16 and17). The PRI summarises macro and micro SDG investment risks and opportunities as follows:
|Macro||By the nature of their investments, asset owners that choose to hold a diversified portfolio, investing in a wide range of asset classes and geographies, will be exposed to the global challenges that the SDGs represent. Failure to achieve the SDGs will impact all countries and sectors to some degree, and as such create macro financial risks.||Achieving the SDGs will be a key driver of global economic growth, which any long-term investor will acknowledge as the main ultimate structural source of financial return.|
|Micro||The challenges put forward by the SDGs reflect that there are very specific regulatory. ethical and operational risks which can be financially material across industries, companies, regions and countries.||Companies globally moving towards more sustainable business practices, products and services provide new investment opportunities.|
United Nations Global Compact and KPMG (2015): Sustainable Development Goals Matrix - Financial Services
This Matrix provides industry specific ideas for action and practical examples for each of the SDGs. It identifies four themes dies this under four key themes:
- Access: Improving access to financial services
Increasing financial inclusion helps individuals to improve their financial resilience and independence. This applies within developed and developing countries. The report provides examples of where improving access to financial services has contributed to reduced poverty and hunger, improved population health and increased access to education (SDGs 1, 2, 3 and 4). The report also provides examples of where support for SMEs creates jobs and economic growth (SDG 8).
- Risk: Leveraging risk expertise to directly influence customer & investor behaviour
Improving information and data reporting aids market understanding of longer-term concerns and externalities, which enables investors to make informed decisions. In turn, this facilitates innovative pricing models which incentivise more sustainable living and production (SDG 12). There are already global, financial services-wide initiatives in place to address this, such as the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD).
Meeting the SDGs will require capital investment for example in renewable energy (SDGs 7 and 13) and other infrastructure projects (SDGs 6 and 9). The reports suggests this will impact asset managers in meeting the needs of impact investors, sovereign wealth funds in helping to de-risk institutional investors and institutional investors themselves taking a ;longer term investment horizon. projects (SDGs 6, 9).
- Cross-cutting issues including fiduciary duty, partnerships & corporate responsibility
Cross-cutting financial issues include positively influencing ESG practices of corporate clients and investee companies with a positive role for stewardship and engagement. This can include assistance in the adoption of good practice principles, policies and risk frameworks to guide business transactions and investments. This could for example relate to internal practices in areas such as fair pay (living wage SDG 1, gender pay gap SDG5), diversity (SDG 10) and energy and waste (SDGs 7, 12 and 13).
World Benchmarking Alliance (WBA)
WBA’s mission is to provide everyone with access to information that indicates how companies are contributing to the SDGs. It will do so by developing, funding, housing, and safeguarding free and publicly available corporate sustainability benchmarks. It will rank companies on their sustainability performance and contribution to achieving the SDGs. It is hoped that this will enable investors, civil society, governments, and individuals to exert their full influence to improve corporate sustainability performance.
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Delivered by the IFRS 17 Contractual Service Margin working party.
The Certified Actuarial Analyst (CAA) qualification has rapidly established itself as adding real value, to insurers and consultancies, and to the clients of consultancies, around the World. CAAs work alongside actuaries and actuarial students, as well as other financial services professionals, in an increasingly broad range of roles and fields.
This session is a repeat of the one earlier today at 09:30
Many individuals and institutions have a long-term focus, and invest funds for the benefit of future generations. Their strategy should reflect their long horizon. University endowments are one of the oldest classes of institutional investor, and I will present the first study of the management of these endowments over the very long term.
This year's GIRO has been re-designed as a virtual conference to offer members and non-members the opportunity to get up to date content from leading experts in the general insurance field via online webinars. All sessions will be recorded and made available to purchase and re-watch post-event on the IFoA's GI Online Learning Resource area.
This year's Life Conference has been re-designed as a virtual conference to offer members and non-members the opportunity to get up to date content from leading experts in the life insurance field via online webinars. All sessions will be recorded and made available to purchase and re-watch post-event on the IFoA's website.
This webinar will provide an update on the emerging thinking around future regulation of DB schemes:
The webinar will discuss the challenges and opportunities schemes face in evaluating end game options, choosing a target state and understanding the impact this strategic decision could have on member outcomes long after the “end state” is reached. Adolfo, Kevin and Rhian bring over 60 years of experience in the industry and a variety of perspectives as scheme actuary, covenant adviser, trustee, de-risking adviser and insurer.
Cash-flow driven investing is a game-changer for DB pension funds navigating their end-game. Suitable for sponsors who want to reduce risks on their balance sheets. And for trustees, it shifts the focus to providing greater certainty of returns, managing funding level volatility and ensuring they have enough income to pay cash-flow requirements.
Patrick Kennedy, Partner at Gateley Legal and Founding Director of Entrust (a leading professional pensions trustee company), will be delivering an update on the latest legal developments during the course of 2020. With both a pensions legal perspective and over 25 years of trustee service, Patrick will seek to highlight how the letter of the law has continued to evolve against the backdrop of a difficult and challenging year
The talk will provide an understanding of the priorities and relationships between deficit reduction contributions, in the context of wider scheme funding, and different types of value outflow from the employer based on the working party’s recently published report.