A guide to building climate-financial scenarios

Scenarios can help with multiple activities, ranging from business planning to risk management, and users will have their own starting point, perspectives and requirements. This paper, a collaboration between HSBC and Grantham Institute seeks to capture some of these perspectives and constructs a framework that different users within a firm can use as they start to implement climate scenarios and analyse results.

Key points

This paper lays out the steps required to bridge the gap between the policy actions and technological choices that drive emissions reduction and the resulting impact on the operating and financial conditions of economic agents. It discusses the need for different models and methods to overcome issues of complexity and uncertainty and stresses the value of qualitative analysis and a rich narrative before embarking on scenario modelling.