Climate risk reporting is an increasingly important topic both for external reporting to shareholders as well as for regulatory purposes (e.g. the production of integrated and/or sustainability reports). Professional actuaries have important skills insight into this topic and it is important to get more research published; particularly in relation to the increasing role of narrative, sustainability and climate change issues. The Task Force on Climate-Related Financial Disclosures (TCFD) has recently issued guidance on these issues, while the Prudential Regulatory Authority has issued regulatory guidance and recommendations concerning the impact of climate change on the UK insurance industry.
Given that the TCFD guidance is only gradually being implemented there is only limited international evidence on climate risk reporting practices. The working party is undertaking further research concerning the impact of these developments on climate risk-related practices in reporting by a range of UK insurance companies and pension funds.
The main outcomes from the working party will be a report that:
- overviews current guidelines, protocols, standards and rules relevant to climate risk reporting for UK insurance firms and pension schemes
- summarises the TCFD-related risk reporting disclosure practices of a sample of UK listed insurance firms and pension schemes concerning:
- their principal risk exposures to climate change
- financial impact of climate-related risks on their business, strategy and financial planning processes
- risk management processes used for managing these risks
- metrics and targets used to assess and manage these risks
- examines differences in practice by size and type of entity, and over time
- provide examples of best practice (and potentially poor practice).
The paper will be disseminated through a number of channels within the actuarial profession and with other external interested parties such as the FRC, listed companies and in conjunction with other professional groups
***Details of the Environmental Risk Reporting working party can be found here.
- 9 November 2017
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