The webinar will introduce two papers prepared through a collaboration between an IFoA working party and Ortec Finance. 

The papers explore how scenario analysis can be used as a tool for forward-looking assessment of climate-related risks and opportunities for financial institutions. They use Ortec Finance’s top-down modelling approach which combines climate science with macro-economic and financial modelling in order to integrate quantified climate impacts into asset-liability modelling. 

Three scenarios are considered: two scenarios in which the Paris Agreement climate targets are met, one in an orderly manner and one disorderly, and a third scenario in which we fail to transition to a low-carbon economy. 

The first paper applies the scenarios to an example defined benefit pension scheme, illustrating how climate change might affect the evolution of its funding position over the next twenty years. 

The second paper explores the potential long-term effects of climate change on the economy and financial markets in more depth by providing further detail of the modelling outputs over the period to 2060.

Additional documents available within course page:

• Climate Analysis Sessional Slides
• Climate Scenario Webinar Q&A
• Climate Scenario Analysis for Pension Schemes