Green links in the investment chain? Actuaries and the low carbon transition

Authors: Nicholas Taylor*, Goldsmiths University
Topics: Economic Geography, Cultural and Political Ecology
Keywords: green finance, actuaries, risk, investment, financial intermediaries
Session Type: Paper
Day: 4/3/2019
Start / End Time: 2:35 PM / 4:15 PM
Room: Washington 4, Marriott, Exhibition Level
Presentation File: No File Uploaded

It is estimated that $90 trillion of ‘green’ investment needs to be allocated to infrastructure that transitions us to a low carbon global economy (New Climate Economy 2018). There are calls from government, global regulators and the finance sector to mobilise the vast sums of institutional investor assets to support such infrastructure. Yet, these calls have to contend with the fact that most of this capital flows through a ‘chain’ of investment, managed by multiple intermediaries (Arjalies et al 2017). As one of the professions whose members form intermediaries in the investment chain, actuaries are an important group to focus on for a green finance(d) transition. The actuarial profession distinguishes itself from other links in the chain, emphasising its sensitivity to long-term risks and opportunities. This paper employs ethnographic research undertaken via the UK-based Institute and Faculty of Actuaries to explore how actuaries are responding to climate change. It finds that while there are efforts being made within the profession to raise the profile of green finance and climate risk as a fiduciary and investment concern, there are multiple barriers to actuaries acting as ‘green links’ in the investment chain. These include the infiltration of asset management practices and financial economics into the actuarial universe, reliance on market-based disclosure schemes, and the inadequacies of risk management for a problem like climate change. While actuaries may not be agents of radical transformation, critically examining their role can open up understanding of what the barriers are to realising such change.

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