The (mis)use of scenarios in fossil fuel and industry climate disclosures

The report examines how fossil fuel and other high-emitting companies use climate scenarios in public disclosures to claim alignment with the Paris Agreement. Despite widespread claims of alignment, global oil and gas emissions have increased since the Paris Agreement was adopted. The analysis finds that scenarios are frequently applied in ways that obscure risk rather than inform investors.

Why?

Companies increasingly rely on climate scenarios, particularly integrated assessment model (IAM) scenarios, to demonstrate Paris alignment. These scenarios are used to frame transition pathways, emissions targets and strategic resilience. However, scenario use often lacks transparency and methodological rigour, allowing companies to claim alignment without demonstrating credible consistency with global emissions pathways.

What is the result?

Misuse of scenarios enables companies to present strategies as Paris-aligned while continuing to invest in new fossil fuel supply. Investors relying on these disclosures may underestimate transition, stranded asset and reserve risks. The report finds that scenario misuse contributes to a persistent gap between stated alignment and real-world emissions outcomes.

Study sample

Investor-owned companies account for almost a quarter of total emissions from the 122 largest oil, gas, coal and cement producers, known as carbon majors. The study examines climate-related disclosures from a sample representing more than half of total investor-owned carbon major emissions. Some of these companies participated in “Say on Climate” votes, where shareholders are asked to approve climate strategies.

Some carbon majors used IAM scenarios to assess Paris alignment

A subset of companies explicitly referenced IAM, IPCC, IEA or NGFS scenarios when discussing climate targets and alignment. Scenario references were more common among companies facing higher investor scrutiny. However, referencing scenarios did not guarantee robust or accurate interpretation of their implications.

Most Say on Climate participants used IAM scenarios to assess Paris alignment

Companies that participated in Say on Climate votes were more likely to mention IAM scenarios, global climate goals, scope 3 emissions and resilience to climate impacts. While Say on Climate appears to motivate scenario use, it also correlates with higher rates of scenario misuse, suggesting that disclosure volume has increased faster than disclosure quality.

A summary of IAM scenario misuse across our sample of investor-owned carbon majors

The report identifies several recurring forms of misuse.
• 93% of companies using scenarios did not disclose carbon capture and storage (CCS) or carbon dioxide removal (CDR) requirements, particularly post-2050, despite these being critical to managing temperature overshoot.
• 67% relied on scenarios more than two years old, misaligning targets with updated emissions realities and masking the need for steeper reductions.
• 47% collapsed scenario pathways into ranges or “ribbons”, obscuring commodity-specific dependencies and stranded asset risk.
• 40% averaged variables across incompatible scenarios, erasing trade-offs and implying infeasible upper-bound outcomes.
• 40% neglected probabilistic temperature outcomes, grouping scenarios under vague temperature labels that conceal differences in feasibility and impacts.
• 33% compared point-in-time targets to scenario pathways without showing emissions trajectories, despite cumulative emissions being critical for temperature outcomes.
• 27% mixed sector-specific pathways with whole-economy scenarios, misrepresenting sectoral emissions reduction requirements.

How the IAMC can help prevent and correct scenario misuse

The report proposes actions for the modelling and expert community. These include introducing scenario expiry dates with formal update and renewal processes, adopting clearer naming conventions that specify peak temperature and overshoot duration, and establishing public consultation mechanisms for scenario databases. Greater engagement between companies, investors and scenario experts is presented as necessary to improve disclosure integrity and decision-usefulness.