Intergenerational fairness must be a priority for policymakers if we are going to meet todays needs without putting younger, or future, generations at a disadvantage.
"Intergenerational fairness must be a priority for policymakers if we are going to meet today's needs without putting younger, or future, generations at a disadvantage."
These were IFoA president Colin Wilson's opening words in the first of a new series of bulletins on intergenerational fairness.
The first bulletin focused on the risks to financial stability posed by climate change, and aimed to raise awareness of potential actions the financial system can take today, to leave a better tomorrow for future generations.
The bulletin considers the role of discount rates, financial disclosure and the importance of understanding not just the likely possible outcomes but the worst case scenario when assessing the potential impact of climate change.
A particular focus is on the role of long-term institutional investors, such as pension funds and life insurance companies.
The bulletin was launched at an event at Staple Inn Hall, London, where a selection of the bulletin's contributors presented their perspectives on the issue from a number of unique angles.
? Matthew Bell, chief executive of the Committee on Climate Change, asked us to think about how the decisions taken by those alive today could determine what kind of world future generations will inhabit.
? James Orr, chief actuary, general insurance, at the Bank of England's Prudential Regulation Authority, reminded us of governor Mark Carney's 2015 speech on 'the tragedy of the horizon'. He highlighted the three channels through which climaterelated factors could present themselves, encouraging us to think about the physical, transition and liability risks in relation to climate change.
? Faith Ward, chief responsible investment and risk officer at the Environment Agency Pension Fund, gave a real-life example of how some organisations are putting responsible investment into practice, particularly around climate-related investment risks. Intergenerational fairness issues are intrinsic to her work at the EAPF, with many of their liabilities running into the 2100s.
? Professor Henry Shue, Emeritus Fellow at Merton College Oxford, put the other contributors' comments into practical context, citing studies that indicate an irreversible rise in sea level as an example of points of no return with respect to climate change.
The implications of these tipping points for future generations are clear, and all the panellists were keen to discuss how actuaries and the broader financial services sector could play a part in drawing attention to, and mitigating, climate risk.
Throughout 2017, this series will aim to raise the profile of the debate around what is a fair contract between generations in responding to long-term challenges, so that neither current nor future generations are unfairly burdened. Look out for bulletins on pensions and health later in the year.
The bulletin is available at www.actuaries.org.uk/bulletin1-climate-change