The Network for Greening the Financial System (NGFS) breaks new ground with the release of the first ever short-term climate scenarios. They provide a detailed view of how climate change and climate policies could affect the global economy and financial system in the near future. This new tool is designed to enhance climate stress-testing and macroeconomic risk assessment, providing valuable insights for monetary policy and macro-prudential policy.

The NGFS presents four distinct climate scenarios to evaluate the impacts of physical and transition shocks up to 2030. These scenarios demonstrate that delaying climate policy could also be costly in the short run.

Delaying the transition by just three years could reduce global GDP by almost 1 % by 2030. Additionally, extreme weather events in one region can have global repercussions through international linkages in supply chains, trade, and financial flows.

Sabine Mauderer, 
Chair of the NGFS and First Deputy Governor of the Deutsche Bundesbank

© Frank Rumpenhorst

“The new NGFS short-term climate scenarios are a milestone in enhancing our understanding of climate-related risks. Extreme weather events and abrupt changes in transition policies can significantly affect our economies and financial sectors in the short run. This new NGFS tool offers the financial community valuable insights into the implications of adverse climate scenarios in the near term, with impressive sectoral and geographical granularity. The results remind us that reducing or delaying climate action will likely worsen future economic damages.”