A guide to building climate-financial scenarios for financial institutions

Abstract

This briefing considers how the financial sector can manage the risks associated with moving to a zero-carbon future. The paper outlines why it is essential for financial institutions to understand so-called climate transition scenarios, which explore this journey to a zero-carbon future. The paper also sets out a framework that financial institutions can use to construct, or understand and use, climate transition scenarios in the context of financial sector risk management.