Reaching net zero won’t be enough to limit global temperatures to 1.5°C, according to research from the Institute and Faculty of Actuaries and the University of Exeter.
The latest paper by the two organisations claims that the planet is more sensitive to the level of greenhouse gases being emitted than the accepted science suggests.
“We look at whether that sensitivity is at the top of the range identified by the Intergovernmental Panel on Climate Change in 2018,” explained Sandy Trust, the head of planetary solvency at the IFoA, referring to the IPCC’s Special Report on Global Warming of 1.5°C, which has formed the basis of subsequent net zero targets.
“Our conclusion is that carbon budgets have been overestimated, and that achieving net zero won’t be sufficient to keep us below 1.5°C.”T
he research is based on newer evidence, which was not available to the IPCC at the time, including the fall-out from recent spikes in global temperatures, and the reduction in ‘aerosol cooling’ – a natural phenomenon that helps to slow the pace of climate change.
“Essentially, we’ve done an actuarial review of climate sensitivity, taking into account the latest science, and then we’ve taken a mathematical approach to assessing economic damages, based on the temperatures humankind can adapt to,” Trust told IPE.
“Most economists have developed climate-risk models based on the underlying assumption that markets will continue to grow – they just might not grow as fast.”
The report argues that financial markets must reevaluate their own climate scenarios, and increase the urgency with which they deal with climate risks and impacts in their own portfolios.
It comes the same day the World Economic Forum (WEF) found that “environmental concerns are being deprioritised” by decision-makers.In its latest annual global risks report, 1,300 experts were asked to identify the most likely driver of material international crises in 2026.
Top of the list, with nearly a fifth of the vote, was “geoeconomic confrontation”.
Extreme weather events garnered just 8%, coming in third, after state-based armed conflict.
“In the outlook for the next two years, a majority of environmental risks experienced declines in ranking, with ‘extreme weather events’ moving from #2 to #4 and ‘pollution’ from #6 to #9,” explained WEF.
Critical change to earth systems and biodiversity loss and ecosystem collapse declined by seven and five positions, respectively, putting them in the lower half of the risk list.
All environmental risks also declined in severity score for the two-year time horizon, compared with last year’s findings.
“In other words, not only do their rankings decline relative to other risk categories, but there has also been an absolute shift away from concerns about the environment,” WEF noted.
When asked about risks over the next decade, those linked to the environment retained their ranking as the most severe: extreme weather events were identified as the top risk, and five of the top 10 were environmental in nature.
