Forward-looking insights: New scenarios simulate short-term economic and financial disruptions from climate shocks through 2030.
Direct application: High-resolution data supports climate stress-testing, risk assessments, and monetary policy planning.
Strategic tool for leaders: Developed with top academics, the tool equips financial institutions to anticipate near-term volatility from physical and transition climate risks.
The Network for Greening the Financial System (NGFS) has released its first vintage of short-term climate scenarios, offering financial institutions, policymakers, and investors a detailed view of how climate events and transition policies may disrupt economies by 2030.
The tool, publicly and freely available, simulates sectoral and macroeconomic pathways under four distinct climate shock scenarios—each designed to assess both physical and transition-related risks. It was developed in collaboration with leading research institutions, including CLIMAFIN, E3-Modelling/ RICARDO, and IIASA.
“The new NGFS short-term climate scenarios are a milestone in enhancing our understanding of climate-related risks,” said Sabine Mauderer, Chair of the NGFS and First Deputy Governor of the Deutsche Bundesbank. “Extreme weather events and abrupt changes in transition policies can significantly affect our economies and financial sectors in the short run.”
With an emphasis on sectoral granularity and financial metrics, the dataset is tailored for climate stress testing and macroeconomic risk assessments. Institutions can use the insights to evaluate exposures, test resilience, and prepare for tail risks with direct monetary and supervisory implications.
RELATED ARTICLE: NGFS Unveils Dual Reports on Nature-Related Financial Risks and Litigation
“This new set of scenarios helps to describe the more immediate impacts of climate shocks and policy shifts, in a timeframe and level of detail that is especially relevant for investment decisions, financial supervision, monetary policy, and risk management,” said Livio Stracca, Chair of the NGFS workstream on Scenario and Design Analysis and Deputy Director General Financial Stability at the European Central Bank.
The release builds on the NGFS’s October 2023 conceptual note on short-term scenarios and has undergone rigorous quality checks to ensure robustness.
“The results remind us that reducing or delaying climate action will likely increase future economic damages,” Mauderer added.
Executives, regulators, and institutional investors can download the dataset to support strategy development, portfolio risk assessments, and regulatory compliance.
Follow ESG News on LinkedIn
