Our proprietary climate scenarios provides comprehensive financial insight and return impacts across macroeconomies, asset classes and sectors driven from climate change-related transition, physical and market pricing risks.
The seven climate scenarios developed in exclusive partnership with Cambridge Econometrics, are used in combination with Economic Scenario Generator to quantify a portfolio’s climate risks as well as opportunities, across all asset classes and macroeconomic variables.
Net-Zero
Evaluates the risk and opportunities under a highly ambitious but orderly transition with climate adaptation
- Highly ambitious low-carbon policy and rapid technology transition
- Low physical risks due to lower global temperatures and adaptation takes place
- No market pricing-in shocks
Net-Zero Financial Crisis
Evaluates the resilience to sudden repricing, triggering market dislocation centred on high-emitting stocks
- Highly ambitious low-carbon policy and rapid technology transition
- Low physical risks due to lower global temperatures and adaptation takes place
- Sudden divestments in 2026 to align with the Paris Agreement goals have disruptive effects on financial markets with sudden repricing followed by stranded assets and a sentiment shock
An additional stress version of this scenario evaluates the impact of extreme disruption from financial markets.
Delayed Net-Zero
Evaluates the resilience when a sudden step-up in policy action in 2030 drives a sentiment shock in financial markets
- Limited additional action until 2030 when a highly ambitious set of low-carbon policies are introduced
- Partial adaptation limits short to medium term physical risks
- Financial markets price-in transition and physical risk in 2030 to align with ambitious policy, announcement followed by stranded assets and a sentiment shock
Limited Action
Evaluates how falling short of meeting emissions targets and pledges would drive high exposure to physical risks
- Emission targets and commitments are not fully met
- High chronic and acute physical risks
- Financial markets price-in lower expected performance in 2030 and 2039 as the scale of future risks become more widely recognized and understood
High Warming
Evaluates implications of a future without any further policy action to limit climate change, triggering multiple climate tipping points and very severe physical risks
- No new low-carbon policies are enacted, but the transition progresses on economic grounds
- Very severe chronic and acute physical impacts
- Financial markets price-in climate-related risks in 2030 and 2039 as the scale of future risks become more widely accepted and understood
An additional stress version of this scenario evaluates a complete system collapse driving a worst-case outcome.
About ClimateMAPS
ClimateMAPS - Ortec Finance’s top down climate scenario analysis solution for financial institutions, in exclusive partnership with Cambridge Econometrics, realistically quantifies a financial institution’s portfolio climate risks as well as opportunities, across all asset classes and macroeconomic variables. Its comprehensive asset class, macroeconomic and sector insights help financial institutions understand how climate change can impact returns and can be integrated with traditional risk analysis and asset liability management frameworks.