slides [ppt]
TRANSCRIPT
Actuaries, Environmental Policy and the Public Interest
Nick Silver and Paul Dickinson, Environmental Research Group
Contents
Introduction – why should actuaries be interested in the environment
Assets - Climate change and investment policy
Liabilities – actuarial modelling and climate change
Why should actuaries be interested in the environment?
Insurance
Long term
The big issue
Key Skills
Beneficiaries’ interests
Intergenerational equity
Date 2003 2033 2063
Grandchild -30 0 30
Child 0 30 60
Age 33 63 93
Damage > Growth
Who cares about climate change?
Greenpeace?
People in Bangladesh?
Small island states?
Carbon Disclosure Project signatory investors
Abbey National, Allianz / Dresdner, Baillie, Cooperative Insurance Society, Credit Suisse Group, Gartmore, Henderson, ING, Insight Investment, Jupiter, Legal & General, Merrill Lynch Investment Management, Morley Fund Management, Munich Re, Newton Investment Management, Ontario Municipal Employees Retirement Sys.Rabobank, Royal Bank of Scotland, Societe Generale, Storebrand, Swiss Re Asset Management, Threadneedle Investments, UBS Global Asset Management, University Superannuation Scheme
Investors, politicians and climate change
“Congratulations on the success of the Carbon Disclosure Project. It has some important messages for all of us. Crucially, it illustrates how the answer to reducing greenhouse gas emissions lies as much with companies and investors as it does with governments, international agencies and the public. I find your report enormously encouraging. I hope the Project goes from strength to strength.” Tony Blair, 17 February 2003
“Our business is to help investors vote with their money” Madeleine Albright, CDP launch 5 March 2003
Investors and systemic risk
“I applaud the project for at least three reasons. First it engages institutional investors constructively with the knowledge deficit and breaks the circularity of ignorance surrounding this systemic risk.
CDP is a very positive aspect of shareholder engagement and if there are more shareholders ready to sign up that can only be a very good thing.”
Derek Higgs, 17 February 2003
0
1
2
3
4
5
6
7
Events
80 82 84 86 88 90 92 94 96 98
Year
Number of billion dollar weather disastersNumber of billion dollar weather disasters
Source: Watson 2001
The financial impact of climate change
“If something is true in reality, it must be true in theory”
In 2002 droughts shaved 0.75% off Australian GDP 2002
Destruction of the world through unmitigated climate change is against the regulations (in spirit if not in detail)
Systemic risk of positive feedbacks
The impact of climate change - problems
World warming up - 1.4 to 5.8 Centigrade by 2100
Sea level rising – 18 to 99cm by 2080
Increased incidence of extreme weather events
Water shortages, increased rainfall, flood
Socio-economic factors
The impact of climate change - problems
Past no guide to future
Non-linearity
“Sicilian actuary”
The impact of climate change - solution
RAMP
Risk analysis and management for projects
Actuarial Profession and Institution of Civil Engineers
Manages risk for projects and place financial values on that risk
The impact of climate change - solution
Adapt RAMP
Joint project with other professionals
Risk identification and analysis
Financial evaluation
Risk mitigation
Actuaries, Environmental Policy and the Public Interest
Nick Silver and Paul Dickinson, Environmental Research Group