Climate scenarios are a set of plausible futures that explore how various combinations of climate related risks may affect businesses, strategies, and financial performance over time. They are not predictions about a single "most likely" future but a look a possible ones.
Forum for the Future (link)
Forum for the Future has today published its latest Future of Sustainability report, Courage to Transform— highlighting four possible future trajectories. They start out by setting the context... By 2030:
• Global natural disasters could increase by 40% – this amounts to 540 natural disasters every year; more than one per day.
• The number of droughts is forecast to double.
• Extreme temperature events are set to triple.
• 4.8 million people are at risk of hunger by 2030 due to climate change.
They highlight four possible trajectories, with each underpinned by a particular mindset or approach, and each is a necessarily simplified scenario of what could happen based on the action – and inaction – we’re seeing right now. They are:
Profit Supreme: The mindset here is ‘resist to, or opt out of, change’, driving a focus on maximising shareholder value and profits above all else
Shallow Gestures: Based on the mindset ‘attempt what we can’, Shallow Gestures sees actions being taken but in ways that will ultimately fall short. Incremental measures prevail and we fail to deliver change at scale and pace
Tech Optimism: It’s here people view technology as a solution to all problems, but an over-reliance on it as a ‘silver bullet’ compromises, among other things, the social cohesion needed to tackle deep-rooted social and environmental issues
Courage to Transform: It’s here businesses adopt a truly transformative mindset, fundamentally resetting and asking existential questions about why they exist and how they operate
MSIM TCFD report (link)
MSIM has released an interesting report that covers three possible futures. These include:
Net Zero World narrative (“orderly transition”) – Increased international collaboration and technological advancement results in the globe being on track to limit global warming to 1.5-2 degrees.
Polarised Climate Progress narrative (“disorderly transition”) – Global fragmentation of financial markets due to global success against net zero targets being hampered by division and ulterior motives.
Prioritising Recovery (“hothouse world”) – Focus on growth results in a shift away from curtailing emissions with climate regulations being relaxed leading to significant physical and economic impacts due to climate change.
They then look at the impact of each of these scenarios on various GICs sectors.
The company has also assessed the likely time horizon that TCFD risks are likely to hit.
WEF Global Risks (link)
Another interesting and related piece of work is the global risks report that the WEF publishes each year. The Global Risks Perception Survey (GRPS) has underpinned the Global Risks Report for nearly two decades and is the World Economic Forum’s premier source of original global risks data. This year’s GRPS has brought together leading insights on the evolving global risks landscape from over 1,200 experts across academia, business, government, the international community and civil society.
AmCham Financial Forum (link)
Of interest, AmCham looked at future world scenarios for retail banking. Not directly related to climate change, but with some interesting and relevant ideas.
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