Introduction

This report presents nine quantitative climate scenario analysis case studies from financial institutions, data providers and academia. Its purpose is to demonstrate how forward-looking climate scenarios can be translated into financially material metrics to inform investment, risk management and strategic decisions across asset classes.

Case study summary

The case studies cover listed equity, corporate and sovereign bonds, real estate and loan portfolios, with global, regional and country-specific focus. Time horizons are predominantly long term (2050–2100), though some include near-term, decision-useful analysis. Financial impacts are expressed through equity valuations, asset values, expected losses, probabilities of default and credit ratings. Most studies assess both transition and physical risks using bespoke scenarios informed by NGFS and IPCC pathways.

Key insights and takeaways

Climate risk analysis identifies both downside risks and potential upside. Transition risks tend to have larger impacts on equity valuations than on credit metrics, although credit impacts can be severe, with downgrades of up to four to seven notches in some studies. UK-focused physical risk analysis shows relatively low direct impacts in the near term, but indirect and macroeconomic effects grow materially over time. Effective scenario analysis should consider adaptation capacity, indirect physical risks, recurring hazards and firm-specific positioning within value chains.

Case studies

Aberdeen investments – aberdeen investments climate scenario analysis

Aberdeen applies a probabilistic framework using 16 scenarios to assess global listed equities and corporate bonds. Most companies fall within a –20% to +10% valuation impact range, but firms exposed to “future minerals” can experience uplifts of up to 120%. The analysis highlights wide dispersion within sectors, supporting active security selection and integration of credible transition plans into investment decisions.

Aviva – climate change and insured losses

Using the JBA UK Flood Model, Aviva assesses UK residential flood risk under RCP4.5 and RCP8.5 by 2050. Annual average losses increase from £0.5 billion to approximately £1 billion under RCP8.5, while 1-in-200-year losses rise from £5.9 billion to £8.4 billion. Results highlight growing exposure to surface water and coastal flooding, reinforcing the need for adaptation and resilient housing stock.

Barclays – decarbonisation scenarios in the european cement industry

Barclays analyses three transition scenarios for European cement producers. Equity impacts range from –100% to +25%, driven by assumptions on pricing power and strategic response. The base case, where decarbonisation costs are passed through without margin erosion, appears largely priced in, suggesting capital expenditure risks may be overstated but outcomes remain company specific.

L&G – climate scenario analysis for portfolio risk and valuation assessment

Legal & General evaluates four bespoke scenarios across corporate bonds and equities. By 2050, 2–9% of bonds could be downgraded to sub-investment grade with active management, rising materially if unmanaged. Equity portfolio valuations decline by approximately 11% to 31%. Transition risk dominates outcomes, highlighting the importance of ongoing portfolio management.

Moody’s – impact on The auto industry

Moody’s assesses automotive corporate bonds under NGFS scenarios. Probabilities of default increase from around 1% to 2%, depending on production mix and geographic exposure. Firms with higher electric vehicle exposure show greater resilience under transition scenarios, while physical risk varies by asset location.

MSCI – approaches to scenario analysis

MSCI models UK listed equities to 2100. Under a high-emissions pathway, direct flood-related revenue losses increase from US$0.64 billion today to US$1.33 billion by 2100, while indirect macroeconomic impacts rise from US$225 billion to over US$900 billion, demonstrating non-linear risk escalation.

NatWest and planetrics – decision-useful short-term analysis

This study assesses UK loan portfolios to 2035. Current transition policies contribute approximately £8 million to total expected credit losses of £3.4 billion, with sectoral impacts of –4.2% to –25% for transition-sensitive sectors.

S&P and university of oxford

S&P finds combined physical and transition risks can result in multi-notch corporate downgrades. The University of Oxford shows sovereign ratings, using Thailand as a case study, could be downgraded by up to four notches, with adaptation investment significantly reducing impacts where benefit-cost ratios exceed 1.27.