Climate scenarios analyses: challenges and outlook from the FSB-NGFS joint report
International collaboration is needed towards a common framework for climate scenario analyses
The recent joint report published by the Financial Stability Board (FSB) in cooperation with the Network for Greening the Financial System (NGFS) provides a comprehensive overview of the climate scenario analysis exercises undertaken by more than 53 financial authorities across 36 different jurisdictions. The report aims at drawing lessons for effective climate scenario analysis and contributes to capacity building by advancing a common understanding of the impact of climate change on financial stability. While the NGFS scenarios serve as a reference point for many authorities, the report highlights that wide differences in scope, objectives and methodologies across jurisdictions often limit the comparability of the findings. Data gaps and modeling limitations have been identified as major challenges which likely lead to understating the exposure and the vulnerability to climate-related risks. Going forward, international collaboration will be crucial to share good practices and advance towards a common framework for data and methodologies applied in climate scenario analyses.
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