The use of climate scenario analysis as a tool has become widespread, but a major gap exists in short-term scenarios that explore near-term risks, economic volatility, and potential systemic vulnerabilities. The need for short-term scenarios for climate scenario analysis has grown rapidly in recent years as financial institutions acknowledge the necessity of integrating climate commitments into their short-term planning strategies and addressing climate risks in the near term. However, the majority of currently available climate scenarios focus on long-term perspectives to explore climate risks, with only a limited number taking the short-term into account.

This report, and the accompanying short-term climate scenarios tool, aim to bridge this gap in climate scenario analysis by identifying short-term scenario narratives for financial use. It serves as a guide to help financial institutions understand the implications and drivers of a range of short-term shocks. This report is accompanied by an Excel-based visualization tool with new scenarios that explore a set of macroeconomic, transition, and physical risk shocks, allowing users to explore combinations of these three types of shocks. The report is developed for asset managers, insurers, bankers, and investors.

This report has been produced by UNEP FI’s Risk Centre, a new virtual hub that is integrating resources to help UNEP FI’s members tackle sustainability risks, in partnership with the National Institute for Economic and Social Research.