Actuaries Carbon Collaboration

We are a group of actuaries and others who are working towards a coherent understanding of the issues around carbon emissions and offsets by considering them in an actuarial context. Actuarial thinking around the race to net zero and the interaction between carbon offsetting and carbon markets could contribute to ensuring that organisations' pledges are meaningful and effective. The time value of carbon has parallels to, but is different from, the time value of money, and there is currently no widespread effective approach to it. Looking at the achievement of net zero as the need to balance streams of variable flows of carbon has a clear affinity with the need to balance streams of variable cash flows which forms the basis of much actuarial work, and an actuarial approach, recognising the variability and uncertainties involved, is likely to produce new insights. In particular, it would support the realisation that net zero is a continuous process, rather than a one-off state to be achieved. Moreover, the whole apparatus of carbon credits clearly has many inherent risks and uncertainties that are similar to those faced in the financial world and that are likely to be susceptible to similar analyses and management techniques.
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Keywords: financial services