A sustainability expert from Anglia Ruskin University (ARU) has played a key role in shaping an important new policy aimed at incorporating the loss of biodiversity – and its associated risks and costs – into business decision-making.
The Biodiversity and Nature-Related Risks (BDNRR) policy has been launched today by the Institute and Faculty of Actuaries (IFoA), the UK’s chartered professional body for actuaries which has over 30,000 members worldwide. Actuaries use their mathematical skills to measure and manage risk and uncertainty across the business world.
Professor Aled Jones (pictured), Director of ARU’s Global Sustainability Institute, is the Chair of the IFoA’s Biodiversity Working Party. This aims to improve actuaries’ understanding of biodiversity – which plays a vital role in providing our food, oxygen, and clean water – and the financial impacts caused by the loss of nature.
Since 1970, the Earth’s wildlife populations have fallen by almost 70%, mainly due to deforestation, excessive human consumption, and pollution. Significant impacts are now found across 75% of the global land surface and 66% of the global ocean area, with an estimated one million species threatened with extinction. The timings and exact outcomes of biodiversity loss are still unknown, although the consequences, including financial, are projected to be significant.
Professor Jones has also written biodiversity-focused articles for The Actuary magazine, blogs, and academic papers, and has taken part in events and webinars to increase knowledge and engagement across the actuarial profession.
This work has culminated in the IFoA’s new BDNRR policy, which has a number of aims including the development of effective methods of managing biodiversity risk, better understanding the potential unintended consequences of applying the concept of natural capital and different valuation metrics, and helping the wider global financial services markets to incorporate biodiversity risk into their own work.
Professor Jones, Director of the Global Sustainability Institute at Anglia Ruskin University (ARU), said: “Managing nature-related risks is critical, but currently isn’t carried out by the majority of businesses. The long-term, uncertain, and intangible character of the risks associated with biodiversity loss are actuarial in their nature and should be embedded in a business’ decision-making.
“However, there are significant challenges around understanding and tackling nature-related risks, not least the uncertainty around what the risk might be to a particular organisation from the loss of a specific species or landscape. There are potential ‘tipping points’ in various biodiversity systems and also many indirect impacts which are likely to be much larger than their direct impacts.
“To manage these risks, it’s not simply a case of getting better tools to quantify nature. Whenever we put a financial value on nature – the natural capital approach – it can never capture all the risks and costs associated with biodiversity loss. In this way biodiversity is different from climate change, where it is possible to value risk with greater certainty.
“I’m delighted the Institute and Faculty of Actuaries are championing the importance of using qualitative as well as quantitative data to tackle this issue, and the new Biodiversity and Nature-Related Risks policy will bring the vital topic of biodiversity loss into the boardrooms of some of the world’s largest companies.”
More information about the new policy can be found at: https://actuaries.org.uk/media/f4xfz13j/biodiversity-managing-risk-and-uncertainty-policy-briefing.pdf
