Tuesday September 27, 2022
Authors
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BSR Staff
Climate action has never been more urgent.
BSR’s climate scenario narratives are based on a range of temperature pathways and cross-disciplinary research to capture physical and transition risks. Based on decade-by-decade analysis, scenario planning can inform today’s climate risk disclosures, build resilient business strategies, and present key opportunities for bold action.
Explore the Scenarios
- Continuation of current policies (as of 2020). Without ambitious government or business action, emissions grew rapidly.
- Global temperatures increased by 2°C in 2050, leading to large-scale and persistent climate impacts.
- Low investment in decarbonizing the global energy system.
- Increased competition for vital resources, inequality driven by varying levels of adaptation, and social disruption.
Current Policies: What Defined the Decades
2020
- Geopolitical tensions, “energy independence” policies driven by volatile oil and gas prices, broken supply chains, and inflation all undermined climate action.
- Investments in renewables slowed, the energy system remained largely unaltered and the Paris Agreement effectively collapsed by the end of the decade.
- Climate disasters hit the global population. This did not lead to action but finger-pointing and competition. Investment focused on short-term rather than systemic solutions.
2030
- As climate damage increased, developed economies shifted attention to localized adaptation, by using technologies that were not widely available, including automation and agricultural tech to develop climate-resistant crops.
- Prior commitments to provide climate finance for developing economies were largely abandoned and low-income communities faced worsening climate and economic shocks. Emerging markets forged ahead with high emitting projects.
- Severe climate shocks drove supply chain disruptions, while trade wars increased the number of climate refugees, exacerbating nationalistic policies toward migrants and trade.
2040
- Climate impacts eroded progress on social inclusion and human rights as a “climate adapted” class emerged that could afford privatized services and employees sought adaptation benefits such as housing insurance and early warning systems. Work gravitated further online, as physical climate impacts made offline activities increasingly difficult.
- Social safety nets began to collapse under the pressure of rising inequality from mass migration, poverty, and the rising cost of goods.
- Worsening resource scarcity compounded global competition. Climate impacts and new food production technologies shifted growing regions and trade.
- The transition to a net-zero economy by 2050 required coordinated global action from government, business and society, particularly in the 2020s. Climate tech innovation, massive investment, and changes in legal and regulatory frameworks drove this shift.
- The cost was high, several industries were severely disrupted, the types of jobs changed, and high levels of emissions and supply chain transparency bordered on surveillance.
- With a common goal of limiting warming to 1.5°C in sight, attention began to turn to climate justice, including taking responsibility for refugees, providing reskilling programs, and international climate reparations.
Net Zero: What Defined the Decades
2020
- International collaboration on climate action radically accelerated, with changes in global regulatory frameworks, increased climate financing for emerging economies, and a realignment of capital markets toward decarbonization.
- Climate-tech financing and innovations including battery storage, carbon capture, agricultural technology, and low carbon energy supplies increased dramatically. Satellites and autonomous systems provided high-tech transparency on climate commitments across supply chains.
- The transition required large-scale reskilling and led to high levels of job loss in certain regions and increased migration, which often impacted the most underserved communities.
2030
- Spurred by technologies such as AI and quantum computing, tech solutions to the climate crisis outpaced regulation and resulted in unforeseen impacts, including unintentional bias against underserved communities and increased carbon surveillance.
- The cost of the transition began to bear fruit as emissions declined significantly, and investments in additional energy systems and natural capital solutions began making gains. Many companies made net-positive climate commitments.
- Worker displacement and reskilling began to gain prominence as a sustainability issue and there were new commitments to the socioeconomic costs of the transition.
2040
- As 1.5°C became more achievable, ambition levels rose. Climate and nature-positive action became the new norm along with an increased focus on climate justice, and responsibility for historical emissions.
- Long-term technological investments led to breakthroughs in climate tech and other areas.
- Climate impacts were still felt across the globe, and serious disturbances remained common. However, the frequency and intensity began to stabilize to a “new normal.”
- A decade of inaction in the 2020s, coupled with hard-hitting impacts of climate change, drove mounting public pressure for climate action. What followed was a set of hasty and reactionary policies in the 2030s that sought to rapidly halt GHG emissions and make up for lost time.
- The disorderly approach came at high social and economic costs, but it ultimately led to a halving of emissions by 2040 and peak warming at 1.8°C by 2050. Rising temperatures drove supply chain disruption, food insecurity, mass migration and displacement, reduced economic activity and trade, and social unrest.
- Companies were faced with abrupt and challenging legal mandates to rapidly reduce emissions within short timeframes. Voluntary commitments were no longer seen as adequate.
Delayed Transition: What Defined the Decades
2020
- Limited action was seen from governments and businesses to reduce GHG emissions as they focused their attention on the global economic crisis—precipitated by the COVID-19 health crisis—and compounded by Russia’s invasion of Ukraine, inflation, and US-China tensions.
- Companies continued to set voluntary commitments that were not necessarily enforced. Physical climate impacts led to frequent supply shortages, increasing prices, greater competition for resources, and intensifying commodity market volatility.
- By the turn of the decade, the growing physical impacts of climate change on supply chains, business operations, income, and well-being sparked highly vocal demands for climate action.
2030
- Climate change was declared an emergency in many countries, and governments enacted reactive and abrupt transition policies and adaptation measures. The global crisis response was fragmented and disorderly, with differing policies and levels of response between countries, regions, states, and cities.
- Most sectors were impacted by legal mandates to halve emissions by 2040 and fully decarbonize by 2050. This led to the rushed deployment of renewable energy by businesses, rapid emissions reduction programs at a greater cost, and mass divestment.
- This precipitous reaction brought on negative political and economic consequences, including political and geopolitical instability, reduced governance and adaptation capacity, an increase in stranded assets, large-scale socioeconomic disruption, and rising inequality.
2040
- Rapid action led to a halving of yearly emissions by 2040 compared to 2020 levels, and physical impacts became less severe by mid-century. Localized adaptation responses allowed some populations to gradually build resilience to acute and chronic weather events.
- The cost of the energy transition began to have a lessened impact on economies. Sectors that struggled to decarbonize (e.g., heavy industry, steel, cement, aviation, shipping, mining) gained greater attention, driving technological innovation in hard-to-abate sectors.
- Achieving a just transition became the focus of economic recovery programs. Public incentives drove investment among “green” industries in regions that experienced greater job loss, creating new economic opportunities.
Taken as a set, the climate scenarios offer important insights for business.
In every scenario, the physical impacts of climate change continue to intensify until the mid-2030s. There is an increasingly large divergence in physical risk after 15 years with radically different outcomes across the three scenarios over the long term. This means that while business should anticipate disruptive physical impacts across all scenarios, it is also possible to mitigate those impacts within a strategically relevant time frame.
Delayed action significantly intensifies both physical and transition risks for business and society. While the transition risks in the “Net Zero” scenario may seem high in the near term, they are amplified under “Delayed Transition,” where more drastic and reactive responses will be needed and business would be legally mandated to reduce emissions within a shorter period. Slow action magnifies both physical and transition risks.
Climate Scenarios Focused on the Food, Beverage, and Agriculture (FBA) Industry
In addition to the general-purpose scenarios, BSR has developed three extended climate scenario narratives for the food, beverage, and agriculture industry. BSR’s sector-specific scenario set provides expanded and more holistic business-relevant narratives with decade-by-decade accounts of plausible developments in agriculture, land use, and food systems, grounded in industry-specific data.
Let’s talk about how BSR can help you to transform your business and achieve your sustainability goals.