In a world that’s subject to the inherent uncertainties of climate change, asset owners still need to make informed decisions. In a situation like this, where the evolution of events is unknown, scenario analysis is a useful way to ask ‘what if’ questions, ponder potential future states of the world and explore how assets and liabilities may change in these different versions.

In this paper, we discuss how we've evolved our approach to climate scenario analysis and modelling. We believe that models can be improved by focusing on real-world action and market response – ie we can construct different climate scenarios based on the speed and strength of each.