A document by Carly Lauren Serena Reddington. Click on the document to view its contents.

Financial institutions’ investment and lending portfolios could be affected by both physical climate risks stemming from impacts related to increasing temperatures, and from transition climate risks stemming from the economic consequences of the shift to a low-carbon economy. Here we present a consistent framework to explore near term (to 2030) transition risks and longer term (to 2050) physical risks, globally and in specific regions, for a range of plausible greenhouse gas emissions and associated temperature pathways, spanning 1.5-4oC levels of long-term warming. We draw on a technology-rich, regionally disaggregated Integrated Assessment Model representing energy system, agricultural and land-based greenhouse gas emissions, a reduced complexity climate model to simulate probabilistic global temperature changes over the 21st century, and a suite of impacts models to estimate regional climate-related physical hazards and impacts deriving from the temperature change pathways and their underlying socio-economics. We consider 11 scenarios to explore the dependence of risks on both temperature pathways, as well as socio-economic, technology and policy choices. This builds and expands on existing exercises such as the Network for Greening the Financial System (NGFS). By 2050, physical risks deriving from major heatwaves, agricultural drought, heat stress and crop duration reductions depend greatly on the temperature pathway. By 2030, transition risks most sensitive to temperature pathways stem from economy-wide mitigation costs, carbon price increases, fossil fuel demand reductions and potential stranding of carbon-intensive assets such as coal-fired power stations. The more stringent the mitigation action, the higher the abatement costs and sector-specific transition risks. However, such scenarios result in lower physical climate hazards throughout the century. Our study also explores multiple 2 deg C pathways which demonstrate that scenarios with similar longer-term physical risks could have very different near-term transition risks depending on technological, policy and socio-economic factors. As such, “a single scenario will not answer all questions”.

Sea-level rise (SLR) is a long-lasting consequence of climate change because global anthropogenic warming takes centuries to millennia to equilibrate. SLR projections based on climate models support policy analysis, risk assessment and adaptation planning today, despite their large uncertainties. The central range of the SLR distribution is estimated by process-based models. However, risk-averse practitioners often require information about plausible future conditions that lie in the tails of the SLR distribution, which are poorly defined by existing models. Here, a community effort combining scientist and practitioners, builds on a framework of discussing physical evidence to quantify high-end global SLR for practice. The approach is complementary to the IPCC AR6 report and provides further physically plausible high-end scenarios. High-end estimates for the different SLR components are developed for two climate scenarios at two timescales. For global warming of +2 ˚C in 2100 (SSP1-2.6) relative to pre-industrial values our high-end global SLR estimates are up to 0.9 m in 2100 and 2.5 m in 2300. Similarly, for +5 ˚C (SSP5-8.5) we estimate up to 1.6 m in 2100 and up to 10.4 m in 2300. The large and growing differences between the scenarios beyond 2100 emphasize the long-term benefits of mitigation. However, even a modest 2 ˚C warming may cause multi-meter SLR on centennial time scales with profound consequences for coastal areas. Earlier high-end assessments focused on instability mechanisms in Antarctica, while we emphasize the timing of ice-shelf collapse around Antarctica, which is highly uncertain due to low understanding of the driving processes.