The global economy could experience a 50% reduction in GDP between 2070 and 2090 if immediate policy measures addressing the climate crisis are not implemented.

A new report from the Institute and Faculty of Actuaries (IFoA) warns that existing climate targets overlook significant risks to nature and society.

This involves acknowledging the possibility of triggering multiple tipping points, where crossing certain climate thresholds could become irreversible and limit the world’s ability to manage climate change.

“There is currently no realistic plan in place to avoid this scenario,” the report said.
Climate and nature risks, which are primarily caused by human activity, must be addressed immediately to safeguard society’s security and well-being. Populations are already facing the effects of food system disruptions, water scarcity, heat stress, and infectious diseases. If left unaddressed, the likelihood of mass mortality, widespread displacement, severe economic decline, and conflict increases.

"Planetary Solvency – Finding Our Balance with Nature," a report commissioned in partnership with the University of Exeter, outlines a framework for global risk management to address these challenges and demonstrate how this approach can foster future prosperity. It also highlights how the absence of clear risk communication in policy decisions has resulted in slower-than-necessary action.

The report introduces a new Planetary Solvency risk dashboard, designed to offer valuable risk information that can help policymakers manage human activity within the planet’s finite limits.

Lead author and IFoA Council Member, Sandy Trust, emphasized that an economy cannot exist without a society, and a society requires a place to live.

“Nature is our foundation, providing food, water and air, as well as the raw materials and energy that power our economy. Threats to the stability of this foundation are risks to future human prosperity which we must take action to avoid.”

Sandy stated that commonly used, yet deeply flawed, assessments of the economic impact of climate change show a minimal effect on GDP, causing policymakers to overlook the immense risks posed by current policy directions.

“The risk-led methodology, set out in the report, shows a 50% GDP contraction between 2070 and 2090 unless an alternative course is chartered.”

Professor Tim Lenton at the University of Exeter stated that current approaches are not adequately assessing the growing planetary risks or helping to manage them effectively.
“Planetary solvency applies the established approaches of risk professionals to our life-support system and finds it in jeopardy. It offers a clear way of seeing global risks and prioritising action to limit them.”

IFoA President, Kartina Tahir Thomson, also noted that actuaries are experts in managing risk, and the collaborative nature of their profession drives them to work for the greater good of society.

“This new report shows that now more than ever we need to continue working with policyholders, governments, scientists and other stakeholders, to come up with a solution that will address this emergency, for the benefit of all of society.”

ABOUT IFoA

The Institute and Faculty of Actuaries (IFoA) is the UK’s sole chartered professional body dedicated to the education, development, and regulation of actuaries, both in the UK and internationally.

With over 32,000 members worldwide, the IFoA regulates and represents actuaries throughout their careers, overseeing their education at all stages of qualification and development. The IFoA is responsible for setting examinations, continuing professional development, and establishing professional codes and disciplinary standards for its members.

The IFoA was formed on August 1, 2010, through the merger of the Institute of Actuaries in England and the Faculty of Actuaries in Scotland, following a vote by members of both organizations to combine their respective bodies.