Based on the recommendations of the Taskforce on Climate Related Financial Disclosures (TCFD), the Network for Greening the Financial System (NGFS), a coalition of 91 central banks and monetary supervisors, produced the second iteration of their climate scenarios in June 2021 to make stress testing easier for banks, investors and insurers. The Monetary Authority of Singapore and the Hong Kong Monetary Authority are both members of NGFS.
This issue takes a look at how the NGFS has tried to render the multidimensional puzzle of climate action scenarios into a manageable policy-based guide, and examines why the whole exercise leaves the impression that financial researchers tend to keep within a comfort zone. It also tells how respected economists Nicholas Stern and Joseph Stiglitz argue that existential risk in a hothouse world cannot be addressed with standard utility approaches.