Cat Conquest, co-lead of the Sustainability Board’s Digital Team, sits down with Patrick Cleary, Senior Actuary at the Prudential Regulation Authority (PRA), to chat allthings sustainability, supervision, and inspiration.
I am a life actuary by training, spending the best part of 20 years working for a life insurer, and nearly 15 years working for the prudential regulator. I started with traditional life roles, such as programming and valuation. I then moved from more general management and compliance roles, with a firm’s view of regulator, to the other side of the table. It’s definitely easier to be asking the questions rather than answering them.
Over the last three years, I have edged within the PRA towards climate change and sustainability. Now, my work is split between supervising insurers, and climate change/sustainability matters.
Firstly, I like getting out and about: walking, cycling, and running in the countryside. I value a sense of groundedness with the earth. I also have some young adult children who are cross with my generation: they’re saying, “what have you done to the world?” and “why have you let all this happen?” Intellectually, we are aware of the problems in the world, and more personally, we have these young adults facing these challenges. What kind of world will I walk/run/cycle in the future, and what kind of world will my children live in?
Secondly, straight after university, I spent two years teaching physics and chemistry through Voluntary Services Overseas (VSO) in the Caribbean, on a small island called Nevis. Its population is 10,000 or so, and you can walk around the island in a day. If you climb the hill in the middle, you can see the whole of the island in front of you. It’s terrifically beautiful. It’s also very fragile, and always at risk of hurricanes. This complete view of the island prompted how I think about the world. We could do better with climate change challenges if we could see the world, beautiful and fragile, in front of us like Nevis. For me, this combination of thinking about the future for children, and seeing all of Nevis from above, is very powerful.
Like all things to do with climate change, it’s a bit chicken and egg-ish. When starting out, I thought, “Should I hide away in a corner for a few months, read up, and become more expert first?” The other part of me was thinking, “just get involved and start doing something!”
I would attribute the move to more sustainability-based work to a combination of things:
To others wanting to pivot their career towards sustainability, I’d recommend:
The regulator is clearly not in charge of government policy and strategy, but within our remit, we can set expectations and rules, and we have a range of tools in our toolbox which we can employ. Based upon our objective to promote the safety and soundness of the firms we regulate, we set expectations in 2019 with the Supervisory Statement, followed up in 2020 with the ‘Dear CEO’ letter from Sam Woods, which confirmed that we wanted these expectations embedded for the end of 2021. The PRA’s recently published Climate Change Adaptation Report details how we will take this strategy forward in 2022 by actively assessing the extent to which banks and insurers have embedded our expectations.
We do recognise that much of this is new and inherently challenging and the PRA is continuing to explore a number of climate-related issues. Through the current Climate Biennial Exploratory Scenario exercise the Bank of England has set up, we’ve had long discussions on how to calibrate scenarios, and we’ve drawn from international scenarios from the Network for Greening the Financial System. Firms have worked hard on their responses and we are now in the process of analysing these.
The regulator can also be helpful in bringing things together. With the Financial Conduct Authority (FCA), we’ve set up a Climate Financial Risk Forum (CFRF), which is an industry body developing ‘best practice for industry, by industry’ on managing climate-related financial risks.
This problem is global, so we are working through international contacts to promote coherence in the supervisory response to climate change.
There’s no doubt that in terms of shaping the UK's response to climate change, I can have more influence through work as a prudential regulator than I can individually. So please get involved through your work role.
However, I also encourage actuaries to respond personally. I would say that personal action changes your thinking. There’s limited point in me writing about climate change at work if very regularly I am taking long-haul flights.
I have spoken about halving emissions by 2030, and you can apply this on whatever scale you like. I, Patrick Cleary, my family, my organisation, and my community need to halve emissions by 2030. I’ve heard arguments that individuals can’t do anything, and it makes no difference, but I disagree. Small changes by individuals add up to big changes when enough people do them.
And making changes also changes you.
You can read the full interview published on LinkedIn here.
This blog reflects Patrick Cleary’s views and not those of the PRA and IFoA.
