Climate Concerns

We want better for the future of our planet, children and communities, and if we work hard enough, maybe we will even deserve it.  Americans show bipartisan concern for climate change, with 60 percent viewing climate change as a “major threat” to their well-being and 65 percent wanting more from their government. Additionally, 63 percent find climate change affects their local community today—it’s not simply a looming threat that may impact the next generation.¹

I believe the forward-looking nature of actuaries makes these percentages higher within our profession. We want more action from the government; we have brought increased awareness into our private spheres with carbon footprint tracking apps and daily choices; and many of us also want more from our industry, profession and employers.

In their interviews with prospective employers, millennials, in particular, want to know their stance on sustainability. Actuaries in general also want leadership from their industries. National Youth Poet Laureate Amanda Gorman inspires us to be that change; let’s be brave enough to see it, to be it. So, what can we do?

Actuaries see and report on patterns to predict risk that helps industry responsibly insure the future, so it is imperative that we incorporate climate risk. Let’s start with increased fluency in the profession around climate risk. What are transition risk; taxonomy; the Task Force on Climate-related Financial Disclosures (TCFD); mitigation versus adaptation; and environmental, social and corporate governance (ESG) investing? There is a quickly evolving lexicon, and this falls under climate education—one of the goals of the Society of Actuaries’ (SOA’s) Research Program.

From property and casualty (P&C) perils clearly linked to extreme weather, to health impacts and vector-borne disease, to investments behind pensions and interrelated risks, no line of business in insurance should be considered immune with certainty. There are not only threats, but there also are opportunities for businesses with alternative products and opportunities for the profession. Luckily, there is a surfeit of data to leverage, and the SOA has both published and pipelined projects to provide data-driven insights around climate risk.

While I remember Vice President Al Gore’s senatorial days as a climate activist in the 1980s, the discussion on climate has gone from a leftist polar bear and ozone-hole tête-à-tête to a mainstream global priority. This momentum and massive sorting of efforts led to motivation, concrete objectives, funding in the research and scientific community, some chaos and, I hope, in the end, real change.

We are buoyed by active participation and leadership from the industry, international actuarial associations, regulators, deepening collaboration with nongovernmental bodies and recent attention brought by President Biden and Bill Gates. In this frenetic time, research goals continue to be articulated, and some of these elicit questions that actuaries can answer. It is exciting that we can provide critical input to policymakers, business leaders and regulators for consideration.

Presupposing that concern and research lead to action, I leave you with Figure 1, a cautiously optimistic graph. (Please forgive the imperfect proxies.)

I hope you enjoy this special issue of The Actuary.

Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries or the respective authors’ employers.

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