Climate scenario analysis is a tool used by organizations to assess the potential risks and opportunities associated with different climate scenarios. It involves developing a range of future scenarios that explore how the climate could evolve over time, based on different assumptions about greenhouse gas emissions, climate feedback mechanisms, and socio-economic factors.
Once these scenarios have been developed, organizations can use them to assess the potential impacts of climate change on their business operations, supply chains, and investments. This can include evaluating the physical risks associated with climate change, such as sea level rise, extreme weather events, and changes in temperature and precipitation patterns, as well as the transition risks associated with the shift to a low-carbon economy, such as regulatory changes, technological disruption, and changes in consumer behavior.
By conducting a climate scenario analysis, organizations can identify potential risks and opportunities associated with different climate futures, and develop strategies to manage these risks and capitalize on opportunities. This can help them to build resilience in the face of climate change, and position themselves for long-term success in a low-carbon economy.