Nick Spencer, a Sustainable Investment Advisor, Immediate Past Chair IFoA Sustainability Board and IFoA Council Member, talks about the role that sustainability has played in his career.
My career has moved to a portfolio of different roles. My predominant role is at Gordian Advice, a boutique, responsible investment advisor which helps UK pension funds integrate responsible investment into their investment portfolios and strategy.
I am also an Investment Director for a UK Pension Fund as well as the time as on IFoA Sustainability Board and now as IFoA Council Member. Up to 2018, I led Russell Investments’ advice to large EMEA Institutions and was the EMEA lead on Responsible Investment.
There are three key reasons why sustainability is so important to me. Firstly, as a critical driver of the investment outlook. Integrating sustainability awareness is crucial to securing reliable returns and thus discharging fiduciary duties.
Secondly, reviewing sustainability risks helps uncover deeper investment principles. Short-termism and benchmark fetishism is endemic in the investment industry. Sustainability helps uncover the truer longer-term perspective, refashion the role of metrics and face up to the complexities and uncertainties embedded in any projection of the future.
And finally, what I can’t un-see. You can’t look at doughnut economics, the great acceleration, Dasgupta’s economics of biodiversity, and Ortec Finance’s financial market projections – and un-see what is happening. The core of my actuarial career has been creating sustainable security for millions of pension savers. That security is illusory if we do not transition to a sustainable future.
Potentially, I could date back to the CalPERS code of asset management ethics in 2004, which was a precursor to the 2006 Principles of Responsible Investments. However, I typically date it from working with Paul Udall and the launch of the original Mercer’s 2011 report on Climate Change Scenarios following the UK Stern review.
That started a journey with an ever-increasing amount of climate and sustainability awareness and applications to pension fund investment, including joining the IFoA Resource and Environment Defined Pension Fund Working Party in 2015.
As the immediate past chair of the Sustainability Board, I support the new Chair, Sandy Trust, in the profession’s core sustainability efforts. We structure the Board across six portfolios: education, research, events, policy and regulation, communities, and SDGs. The Board’s aim is to grow these efforts in widening resources and support to the broader actuarial community.
I also co-chaired the IFoA Council-sponsored Climate-related risk task force, which generated 38 recommendations for the profession in addressing climate-related risks. You can read Louise and my article in the Actuary for further details on that!
Creating sustainable security lies at the heart of the actuarial role and profession. The first role of our profession is to ensure that an understanding of sustainability risks and opportunities is embedded and clearly articulated, in all of our work and advice.
But that is not enough. We have a professional, civic, and public interest duty to leverage our actuarial skills to share our insights into the potential futures we face – and the long-term implications of remaining on unsustainable paths.
And finally, an awareness of the universal nature of sustainability risks highlights the impossibility of shielding from the impacts and the limits of individual action. Therefore, we need to collaborate and invest for the transformation into a sustainable future.
Do it! The career opportunities, the needs to solve complex problems, and the opportunities to share and collaborate with a purposeful community are literally boundless.
I would recommend starting with where you are now, the opportunities within your own firm are growing, today. I also recommend learning from the resources that IFoA provides and curates, taking the sustainability certificate, and learning from the ever-increasing array of resources outside the profession.
Getting involved is the best way to develop, so do volunteer. But volunteer from the perspective of what can you provide rather than what can you receive. Help develop a learning environment with peers – which will be more fun and accelerate your progress.
The sustainability practical guides give many details on the different aspects and opportunities in specific roles.
But let me highlight the aspect of double materiality, double materiality requires a perspective not only of how sustainability risks might impact our work but also how our work might impact sustainability. For example, in investment, are the investments supporting or hindering the transition to a low carbon economy? In general insurance, is the replacement of goods encouraging excess consumption? Are the new goods more or less energy efficient? In healthcare and life, can we incentivise lifestyle improvements into premium benefits, especially at the employer level?
Do you have any advice on how to engage employers in sustainability issues and supporting actuarial professionals to bring a focus on sustainability to their roles?
Start with the bottom line. Sustainability efforts are almost always more resource-efficient which is also commercially and financially beneficial.
And then grow that. Sustainable approaches improve risk management, resilience as well as brand value. Move from the benefits in tangibles to the benefits in intangibles. And then address long-term perspective, double materialities, and how sustainability leadership creates commercial opportunities as well as managing business risks.
If you’re interested in finding out more about sustainability at the IFoA you can visit our Sustainability Practice Area page.
