The rise and fall: Climate change and inflation modelling

Nieuws
09-01-2025
Adél Drew
Recent years have shaken assumptions about global inflation. Do the ways in which actuaries work need to change? And do we have enough inflation in our climate scenarios?

By Nick Spencer and Adél Drew

Does your modelling allow for the inflationary effects of the low-carbon transition? And do you understand how tensions may build to create inflation spikes? Do your models implicitly assume that a 2% inflation target will be sustained? 

Historically, the economic cost of polluting the world wasn’t paid for. Transitioning to a non-polluting model – which will involve upfront investment, the conversion of processes, and supply chain transformation – is almost certain to cost more. Any efficiencies gained could reduce costs in the long run… But that is a way away. 

In addition, physical climate factors will almost certainly come at a cost, with more severe weather damaging assets and livelihoods, causing food and water insecurities and increasing global inequalities – and, as a result, geopolitical tension.

It is therefore plausible that we will see higher and probably more volatile inflation in the short term. To explore this hypothesis, we at Milliman developed a UK model to look at how sustainability and inflation relate to one another. Our goals were to understand how inflation could evolve, to learn about the potential for different inflation regimes, and to identify precursors where there are heightened risks of inflationary spikes because of sustainability narratives.

[....]

Lees verder op: The Actuary

Gerelateerde vacatures

Geïnteresseerd in een carrière bij organisaties in ditzelfde vakgebied? Bekijk hieronder de gerelateerde vacatures en vind de perfecte match voor jou!
Top vacature
Pensioenfonds UWV
110.000 - 130.000
Senior
Amsterdam
Manager Vermogensbeheer bij Pensioenfonds UWV is een strategische rol waarbij je verantwoordelijk bent voor het beleggingsbeleid, monitoring en rapportage, en samenwerking met externe partijen. Vereist ervaring en expertise in vermogensbeheer.
Top vacature
Morningstar
Marktconform
Medior
Amsterdam
Our Equity Research team requires an experienced equity analyst to cover European stocks, primarily focusing on a select group of companies in the industrials sector. Performing fundamental analysis within our...
Top vacature
Pensioenfonds Rail & OV
Max. 8.058
Medior, Senior
Utrecht
Als je het leuk vindt om diepgaande analyses te maken, beleggingsportefeuilles te optimaliseren en je het een uitdaging vindt om je mening duidelijk te verwoorden en niet terug te deinzen...
Top vacature
De Nederlandsche Bank
4.600 - 6.600
Senior
Amsterdam
Als econoom bij DNB analyseer je financiële marktontwikkelingen en draag je bij aan financiële stabiliteit en beleid. Je werkt samen met een team van professionals aan marktupdates, diepgaande analyses en...