Strengthening forward-looking strategic scenarios in the private sector

Sectoral climate change mitigation scenarios for strategy development and alignment assessment by economic players

All sectors face growing pressures to transform their business models — environmental sustainability, technological leadership, and control of natural resources. Economic players could make greater use of scientific advances on climate and natural resources to assess risks and opportunities, and to develop policies that strengthen innovation, resilience and competitiveness in their business models.

To date, efforts in the environmental field have focused on climate change mitigation. The main sectoral mitigation scenarios, consistent with the Paris Agreement and developed by international or research institutions, have emerged as the benchmark tool for transforming business models: they enable companies to set targets and interim milestones, translating temperature and carbon emission reduction targets into strategic and operational steps for the company. This report highlights, in particular, three major limitations of the current state of the art and ways to overcome them:

• No single scenario for decision-making under uncertainty. Faced with complex and uncertain futures, relying on just one of these reference scenarios is insufficient to underpin strategic decision-making. The developers of these reference scenarios should broaden the range of strategic options available to companies, so that they can choose between several possible pathways and maintain competitiveness and resilience regardless of which future materialises.

   

• Insufficient integration of nature — and additional blind spots. These reference scenarios could provide more detail on how they take nature into account, given that interoperability between the Paris Agreement and the Global Biodiversity Framework is essential for a sustainable transition. The report highlights two further aspects that have not been adequately addressed: the sectoral and geographical granularity of these scenarios, and their transparency and comparability across different developers.

   

• The circular economy and the integration of value chains: an under-utilised driver of resilience and a prerequisite for sustainable transition. Economic actors should make greater use of circular economic models extended to the value chain, which enable competitiveness, strategic autonomy and resilience to be combined whilst respecting planetary boundaries — a point further elaborated in the parallel study on alignment methodologies.

Ultimately, resilience is built through clear priorities, consistent investments and appropriate governance.