NGFS published short-term climate scenarios for central banks and supervisors

The Network for Greening the Financial System (NGFS), a network of 114 central banks and financial supervisors that aims to accelerate the scaling up of green finance and develop recommendations for central banks’ role for climate change, has released its short-term climate scenarios, a tool offering a dedicated framework to analyse the potential near-term impacts of climate policies and climate change on financial stability and economic resilience.

These short-term scenarios are particularly well-suited for climate stress-testing exercises and for analysing financial risks that may materialise within a business-planning, policy relevant timeframe.

The main takeaways of the short-term scenarios are: i) regional extreme weather events generate temporary but material GDP losses, with effect on the global economy, and could increase the cost of the transition; ii) delaying transition efforts increase the economic costs of transitioning and could cause additional financial stress.