NGFS Climate Scenarios For Central Banks And Supervisors

Categories : Regulation and Payment System Governance, Regulation of Digital Financial Services


  • The NGFS scenarios have been developed to provide a common starting point for analysing climate risks to the economy and financial system. They have been created as a tool to shed light on potential future risks and to prepare the financial system for the shocks that may arise. Importantly, the NGFS scenarios are not forecasts: instead, they aim at exploring the bookends of plausible futures (neither the most probable nor desirable) for financial risk assessment.
  • To reflect the uncertainty inherent to modeling climate related macroeconomic and financial risks, the NGFS scenarios use different models, and explore a wide range of scenarios across regions and sectors.
  • In this third iteration, the NGFS scenarios have been brought up to date, including by incorporating countries’ commitments to reach net-zero emissions, and have been enriched with more sectoral granularity and a finer representation of physical risk, including acute risks.
  • Reaching global net zero CO2 emissions by 2050 will require an ambitious transition across all sectors of the economy. The NGFS Scenarios show that immediate coordinated transition will nevertheless be less costly than inaction or disorderly transition in the long run.
  • More precisely, physical risks in hot house world scenarios (Current Policies or Nationally Determined Contributions scenarios) will lead to the strongest negative impacts on GDP with economic cost diverging significantly after 2040.