Project Objectives
Drive a common approach to translating climate scenarios into financial impacts.
The NGFS has published the NGFS Scenario Explorer designed to create a common set of input scenarios for stress-test and scenario analysis design in financial markets. These scenarios however are not easily translatable into financial outcomes and approaches to translating these scenarios differ widely. This project will help drive a common approach to translating climate scenarios into financial impacts both as a way to drive harmonization of approaches and to allow a broader set of users to understand and implement such translation exercises.
Reduce the transaction costs of accessing climate stress-test scenarios.
A proliferation of stress-test exercises and scenario analysis exercises has created a fragmented market landscape. There is no meaningful way to compare them at the moment in terms of ambition level, input, approach, etc. Users wishing to select from these options have to go to different portals, download non-standardized data templates sometimes lacking data libraries. This project will curate this universe of scenarios for easy access, comparability, and ‘processability’ in automatic applications.
At the moment, climate stress-test scenarios are narrowly focused on physical and transition risks. Research has shown the potential multiplying effect of pandemic and other sustainability risks. Even within climate change, social risks related to climate change and issues around the just transition, as well as potential broader risks to ecosystem services don’t factor in these exercises. This project will help connect the universe of climate-related risks (narrow) with broader sustainability priorities of the EU Green New Deal and thus ensure a more holistic sustainability testing approach.
Integrate at least 2x other sustainability perspectives from the EU Green New Deal agenda (just transition risks & ecosystem services).
Drive more regulatory harmonization.
Through the technical policy support and the provision of the STRESS platform, the project will help drive broader regulatory harmonization around the analysis, measurement, and response to climate-related risks.