To assist organizations in using climate-related scenario analysis to support the development of disclosures consistent with the Recommendations of the Task Force on Climate-related Financial Disclosures, this technical supplement sets out and discusses:
- Using scenario analysis
- Considerations for applying scenario analysis
- Analytical choices involved in scenario analysis
- Types of climate-related scenarios
- Publicly available climate-related scenarios from the International Energy Agency (IEA), the Intergovernmental Panel on Climate Change (IPCC), and others that can provide context and a basis for company, industry or sector scenarios.
The technical supplement is organized as follows. Section B discusses why scenario analysis is useful, what a scenario is, and how selected companies have used scenarios. Section C discusses the application of scenario analysis; key parameters, assumptions, and analytical choices organizations should consider when they undertake scenario analysis; and some of the key benefits and challenges. Appendix 1 discusses in greater detail the IEA and IPCC scenarios that may be useful as a starting point in developing organization-specific scenarios. Appendix 2 provides a glossary of key terms, Appendix 3 lists sources referenced in this supplement, and Appendix 4 provides other useful references for further reading.