Climate scenario analysis — exploring how different climate futures might affect a company’s strategy, operations, and financial performance — has moved from voluntary best practice to mandatory disclosure. ISSB S2, CSRD/ESRS E1, and UK sustainability disclosure standards all require companies to describe the resilience of their strategy under different climate scenarios.
The typical approach uses IPCC Representative Concentration Pathways (or Shared Socioeconomic Pathways) to model physical risks, and IEA/NGFS scenarios to model transition risks. For most companies, two or three scenarios (e.g., 1.5°C orderly transition, 2.5°C disorderly transition, 3°C+ hot house world) provide sufficient strategic insight.
The challenge is translating global scenarios into company-specific financial impacts. What does a 1.5°C scenario mean for your specific supply chain costs, asset values, revenue mix, and capital expenditure requirements? This translation requires cross-functional collaboration between sustainability, finance, strategy, and operations teams.
RSustain helps clients design and execute climate scenario analyses that satisfy regulatory requirements and inform strategic decisions. Our approach combines climate science, financial modelling, and sector knowledge to produce scenarios that are both credible and useful.
Scenario analysis is not prediction — it is preparation. Companies that use it well will be more resilient; those that treat it as a compliance exercise will miss its strategic value.