Many documentaries are now adopting a focus on climate change, as the impact on the natural world becomes clearer to see. How does the finance industry fit into all of this? The Sustainable Finance Community (SFC), an initiative from the IFoA’s Sustainability Board, examined this topic in our film club with the documentary 'Our Planet: Too Big To Fail' and decided to produce a blog around the ensuing discussion.
According to the BBC, over one billion people have watched Blue Planet II and Planet Earth II since it aired 4 years ago. Human’s thirst for relaxing nature documentaries seems to be growing rapidly, with no sign of stopping. However, these documentaries are highlighting critical problems with our planet and we’re now in one of the largest mass extinction periods in global history. It’s therefore no surprise that many documentaries are now adopting a focus on climate change, as the impact on the natural world becomes clearer to see.
How does the finance industry fit into all of this? The Sustainable Finance Community (SFC), an initiative from the IFoA’s Sustainability Board, examined this topic in our film club with the documentary “Our Planet: Too Big To Fail”.
Produced by WWF, this documentary explores the role the finance sector can play in powering a sustainable future. With fascinating footage of our natural world, narrated by David Attenborough, the documentary immediately grips you as you begin to hear from climate champions and leading figures in sustainable finance and climate change. The short documentary examines 5 key issues that need to be tackled to help the environmental crisis, examining the impact and risks of inaction, investing as usual, and the role the finance sector can play to tackle these problems head-on.
SFC film clubs are structured similarly to a book club: everyone watches the film at the same time, and we regroup afterwards to host a discussion.
It was clear from the start that people enjoyed the film. It was visually enticing, the range and diversity of the speakers were well-balanced, and it makes some compelling points on fundamental issues that need to be tackled to help the environmental crisis. Consistent with many other climate change documentaries out there, it was nice to see key issues and solutions being presented to the viewer. But an opinion that was shared by many in the screening was that while the film does a good job of presenting the “why” and “what”, the film falls short of presenting the “how”.
Our viewers believed that there is an inherent appeal to altruism and values to fix these problems, with little insight into how these issues may feasibly be fixed in practice. This is a problem we see every day in the sustainable finance world: why would companies earning high returns for their stakeholders willingly change policy if it would result in lower returns? There need to be incentive structures in place to ensure these issues are addressed.
Who does the ownership lie with to make these changes? Viewers agreed that the choices an individual can make in an attempt to reduce their carbon footprint are overwhelming. Should we stop eating meat? Do we all cycle to work? Should we be targeting zero waste and recycling? Should we only buy produce from our local area? Leaving the decision down to the individual consumer isn’t going to bring the pace of change required. Systemic change and actions from governments are the only routes to meeting these targets within a reasonable time frame. Some suggestions shared were a full-scale introduction of carbon taxes or changes in the subsidy structure, putting government money into the initiatives driving change.
Another topic that was prevalent throughout the film was the contribution of different companies and industries to the problem. To meet Paris targets, we need to halve greenhouse gas emissions. So when large, polluting companies post record profits, we are left wondering how we enable those making the most money to be the same companies that drive the change.
One of the 5 key messages from the film is “help build the new system we need”. Our viewers thought that companies such as oil companies may hold the key to doing so. We agreed that climate action will never just be a switch we can flick, but it will take years of transition, where companies already in the energy industry and producing these profits have the decision-making power to be able to enact the change and innovate.
So how do we think the actuarial profession sits within this maze? As risk professionals and experts in managing long and short-term projection periods, we are positioned well within the finance sector. But we are also in an industry that will suffer the effects of any changes in the fundamentals of modern-day capitalism and major shifts in legislation. As experts in modelling and understanding risks, we are a profession that can actively contribute to understanding the financial impacts under the different scenarios of climate change.
Climate actuaries are becoming ever more prominent in the industry, helping to understand the potential impacts of early, late, or no-action scenarios. We also sit in a unique position within the sector, with many senior executives of insurance companies and pension funds enabling decisions on whether to choose short-term profits or to prioritise more sustainable practices. This is a fundamental question our group discussed and is touched upon briefly in the film. We all agreed that the environmental impacts of the decisions made by those with investing power should be more considered, with the focus and remuneration placed more on longer-term sustainability, over quarterly or annual profits.
As our discussion came to a close we ended on a more positive note, with our group agreeing that there has been a visible shift in recent years and the landscape does feel more positive, with the age of climate denial coming to an end. It’s easy to adopt an alarmism theme throughout climate documentaries. This structure can leave you feeling overwhelmed, contributing to “climate fatigue”. Our viewers thought this was not the case here and commented that it may have even been too positive! Participants commented that there are obvious steps back each year and huge roadblocks still in place, but cultural awareness has increased exponentially over the last few years. In terms of policy and legislation, there may still be a way to go, but our group believed there is hope for change in that critical department.
As a final discussion piece, it became clear throughout the discussion that there are several other fantastic resources in the form of films, books, or podcasts that also discuss these issues and shed light on potential solutions. Our members kindly circulated their favourites with the rest of the group. They are:
The views and opinions expressed in this blog are those of the authors and do not necessarily reflect the official policy or position of the IFoA.
