Publications

Very few companies make good use of scenarios to anticipate their climate-constrained future

13 February 2019 - Climate Brief - By : Charlotte VAILLES / Clément METIVIER

Climate change induces disruptions of our ecosystems, and the transition to a low-carbon economy significantly affects the political, economic and social landscapes. Businesses have to adapt to those changes, which entails risks and opportunities. Some changes are already visible today, but the deepest changes are expected to materialize over the mid to long term, and there is a lot of uncertainty around their timing and magnitude. In this context, the use of forward-looking scenarios is particularly useful to evaluate the resilience of a business to climate-related risks, and it is recommended by the Task-Force on Climate-related financial disclosures (TCFD) set up by the Financial Stability Board (FSB).

 

This Climate Brief gives an overview of the degree of implementation of climate-related scenario analysis to evaluate risks and opportunities, based on the answers of a sample of 2,003 companies to CDP 2017 Climate Change questionnaire. The analysis shows that:

 

  • Only 5% of companies indicate using scenario analysis to evaluate their climate-related risks and opportunities;
  • Half of these companies are based in Europe;
  • The use of climate-related scenario analysis is much more common among oil and gas companies and energy utilities than in other sectors of activity;
  • Among companies that disclose carrying out a scenario analysis of their transition risks : about 40% indicate using tailored scenarios, in general internally designed and modelled, and only half explicitly mention using a 2°C or more ambitious scenario;
  • Among companies that disclose carrying out a scenario analysis of their physical risks : about 25% indicate using external scenarios and tools, in most cases those put together by the IPCC;
  • Overall, there seems to be confusions in the way climate-related scenarios are understood and used, and a need for guidance on this topic has been identified.

 

This publication will be followed by additional work on climate-related scenario analysis over the course of 2019, which will be publicly available.

 

This research is part of the Reimagining Disclosure Project, led by CDP, and supported by Climate-KIC.

 

 

Very few companies make good use of scenarios to anticipate their climate-constrained future Download
See appendices
I4CE Contacts
Charlotte VAILLES
Charlotte VAILLES
Research Fellow – Financing a fair transition Email
To learn more
  • 05/17/2024 Foreword of the week
    Carbon pricing revenues: their role in financing the climate transition

    Last month, the Executive Secretary of the UNFCCC, Simon Stiell, stressed how important this and next year are for the achievement of the Paris Agreement and called for “a quantum leap in climate finance” ahead of the Spring Meetings of the World Bank Group and International Monetary Fund. Indeed, with emissions required to peak before 2025, our window of opportunity is rapidly closing to keep 1.5°C within reach. More and better finance is urgently needed. Carbon pricing policies and their revenues are part of the tools available that can help fill the climate finance gap.

  • 05/15/2024
    Maximising benefits of carbon pricing through carbon revenue use: A review of international experiences

    Carbon pricing policies and their revenues are part of the tools available that can help fill the climate finance gap. With raising revenues from carbon taxes and emission trading systems (ETSs) that have tripled since the Paris Agreement, and an upward trend that could continue in the medium-term, ‘how to use carbon revenues’ has become a crucial question. This report, prepared as an activity of the EU-funded European Union Climate Dialogues (EUCDs) project, aims to inform policymakers and practitioners on lessons learned and ways forward on the use of carbon revenues, with a comprehensive approach based on a review of international experiences.

  • 05/06/2024
    Appendix tools – Social and Climate Budget Tagging: Insights from Indonesia

    Lorem ipsum dolor sit amet, consectetur adipiscing elit. In suscipit vitae turpis id dignissim. Aenean aliquet quam ac volutpat convallis. Nullam dignissim quis libero eget tempus. Vestibulum cursus odio venenatis, scelerisque augue ac, eleifend leo. Vestibulum sagittis blandit ipsum a ornare. Donec non erat at mauris scelerisque dignissim a sit amet orci. Quisque viverra venenatis magna, vel pharetra tellus laoreet accumsan. Integer vulputate malesuada suscipit. Integer rhoncus, dolor sed facilisis posuere, velit augue lacinia lacus, id fermentum est nulla sodales orci. Quisque et suscipit turpis, sed blandit augue.

See all publications
Press contact Amélie FRITZ Head of Communication and press relations Email
Subscribe to our mailing list :
I register !
Subscribe to our newsletter
Once a week, receive all the information on climate economics
I register !
Fermer