TCFD Climate Scenario Analysis
A guide for finance teams on frequently asked questions
Scenario analysis, a key recommendation of the Task Force on Climate-Related Financial Disclosure (TCFD), allows a company to understand and quantify the risks and uncertainties it may face under different hypothetical futures. It helps in decision making and allows businesses to shape their strategy.
Performing scenario analysis can be a challenging and demanding task due to the complexities that it carries.
As scenario analysis is highly analytical and modelling-based, the commitment and involvement of finance teams from the outset is critical.
Finance teams bring the skillset that is required to understand the modelling process and help businesses embed and translate the scenario analysis outcomes into strategic decisions.
To help finance teams enhance their knowledge of scenario analysis and steer them through the process, we have produced this guidance.
The guide addresses frequently asked questions, including:
- What factors should be considered when selecting scenarios?
- How are scenario analysis findings integrated within business strategy and decisions?
- How should businesses report their scenario analysis findings to respond to investors’ and other stakeholders’ needs?
This guide is based on our work with companies across multiple sectors and the insights we have gained supporting TCFD implementation since its inception.
