Responsible investment

Climate scenarios

The future is uncertain – but you can still anticipate it. Learn how we are using climate and energy transition scenarios to find resilient, adaptable companies and to spot potential investment pitfalls.
Caroline Cook

“Contrasting future scenarios helps us navigate an increasingly volatile climate transition.”

Caroline Cook, Head of Climate Change

The climate scenarios

The Climate Scenarios Project challenges our investment teams to explore varied but plausible futures and consider how portfolio companies and potential holdings would fare. To do so, they consider narratives based on three different transition pathways:

Orderly transition

The world’s average surface temperature rises by no more than 1.5C over pre-industrial levels. As a result, both physical and transition risks are relatively subdued.

Disorderly transition

The temperature gain is closer to 2C. When the system is finally ‘shocked’ towards a successful transition, it is rushed and requires radical change and strong innovation.

Hot house world

Humanity fails to keep the temperature gain below 2C, and by 2100 it has surpassed 2.5C. Extreme weather events are more frequent, geopolitical hostility rises and inequality grows. Investments focus on adaptation, especially in agriculture and healthcare.

In-depth introduction

solar panels on a hill with a mountain backdrop

The Climate Scenarios Project

The impacts of climate change on our world and society will be profound.
 
Read our paper on how we are using stories about plausible futures to anticipate investment risks and opportunities.
 
Read our deeper dive into the impact of Disorderly Transition scenarios on macro indicators and market outcomes.

Important information

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Invest, responsibly

We think companies that act sustainably and treat society fairly have better growth prospects. Additionally, we believe there can be great growth opportunities when firms innovate to meet society’s needs. Find out more about how we consider environmental, social and governance matters and the resulting conversations we have with the businesses we invest in.