FMA on climate scenario analysis, sector reports

“Scenario analysis is a strategic tool where CREs construct plausible pathways to different world futures and analyse how resilient their current business model and strategy would be within these scenarios,” says FMA climate related disclosures manager Jenika Phipps.

Under the regime, CREs must include scenario analysis and explain how it was conducted in their annual climate statements.  The information sheet explains the FMA’s expectations for the scenario analysis disclosures set out in the External Reporting Board’s Aotearoa New Zealand Climate Standards.

The information sheet explains the importance of scenario analysis as a tool for exploring significant uncertainties about the scale and speed of physical and transitional climate-related impacts that are likely to play out in the future.

Last month the Financial Services Council and Boutique Investment Group published a climate scenario analysis - Climate Scenario Narratives for the Financial Services Sector, which the FMA commented on in draft form.