On 7 November 2023, the Network for Greening the Financial System (NGFS) published the fourth vintage of its long-term climate macro-financial scenarios for forward-looking climate risks assessments. The NGFS scenarios explore the transition and physical impacts of climate change over a long time horizon and under varying assumptions.

The NGFS scenarios have been updated to account for the latest GDP and population pathways, and the most recent country-level climate commitments as of March 2023.

Key changes to the scenarios include:

• The orderly scenarios now reflect climate policy delays and the energy crisis following the war in Ukraine.
• The modelling of acute physical risks has been enhanced with the inclusion of two more hazards (droughts and heatwaves) and increased geographical granularity.
• Two new scenarios have been developed:

• the “Too-little-too-late” Fragmented World scenario that illustrates the adverse consequences of delayed and divergent climate policy ambitions globally; and
• the “Orderly” Low Demand scenario that explores a Paris-aligned transition driven by substantial behavioural changes in which global warming is limited to 1.5°C.
• The Divergent Net Zero scenario has been discontinued.

The NGFS welcomes feedback from users on the scenarios to keep on improving them.

For further updates on regulatory developments in the ESG space please visit our Financial Services Regulatory Developments in ESG hub.