Five-year horizon using a baseline and four scenarios with datasets for analysing the impacts of climate events and policies on financial stability.

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Key drivers

1. Physical risk (climate events): low to high.
2. Transition risk (policy changes): low to high.

Scenarios

1. Highway to Paris: orderly policy changes to meet the goals of Paris Agreement 2015. Little consideration of physical risk within the scenario.
2. Sudden wake-up call: disruptive policy changes towards net zero, causing a ‘Minsky moment‘. Little consideration of physical risk within the scenario.
3. Disasters and policy stagnation: disruptive climate events.* Little consideration of transition risk within the scenario.
4. Diverging realities: advanced economies pursue ‘Highway to Paris’; others are highly affected by climate events. Some consideration of transition risk within the scenario.

* Subsidiary scenarios cover physical events taking place in different continents.

Comparison of NGFS scenarios

NGFS states that these near-term scenarios are not easily comparable to its long-term scenarios. However the near-term baseline is comparable to the long-term Nationally Determined Contributions (NDCs) scenario.