Climate scenarios are essential tools for assessing the financial impacts of climate risks and taking resilience measures.

These scenarios are no longer theoretical; they provide reliable insights for forward-looking financial decisions for investors and issuers.

Scientific Climate Ratings leverages three main scenario categories chosen for their reliable characteristics: Orderly, Disorderly, and No Transition.

1- Orderly

This scenario involves the immediate and coordinated application of climate policies.

Physical risks are contained, and transition risks are managed through early, coordinated action, with the aim to reach net-zero emissions by 2050.

2- Disorderly

In this scenario, the net-zero transition is delayed, and carbon taxes are postponed until 2030.

To compensate for the delay, carbon taxes are then introduced sharply as a shock, which entails high transition risks.

3- No Transition

This scenario assumes that climate policies remain unchanged from their current state.

As a result, it leads to low transition risks but high physical risks.

SCR’s Approach to Climate Scenarios

SCR’s methodology assigns probabilities to major climate scenarios that are built on a set of hypotheses and assumptions, serving as projections rather than definitive forecasts.

These scenarios typically lack assigned probabilities and does not indicate how likely any given outcome is.

Developed by the EDHEC Climate Institute (Rebonato et al., 2025), SCR’s approach assesses the likelihood of climate scenarios based on the probability distribution of the abatement speed’s aggressiveness.

Assigning probability distributions to different projections enables to capture the range of plausible futures and incorporate these insights into risk assessment, allowing for a more balanced evaluation of expected outcomes and tail risks.

Learn more about the science behind our methodology.