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SCENARIO ANALYSIS: FORESEEING THE FUTURE
The interactive debate covered a 30 year time-span, highlighting potential issues such as:
"As humans, we find it very hard to foresee a future that is radically different from the past, and we expect change to come gradually," said Clyde & Co’s Natalia Dorfman . “Business as usual needs to change but that’s hard because we don’t know exactly what the future looks like.” This is where scenario analysis comes into play – to help us consider the range of possibilities the future might hold, and to start thinking in a different way – outside the realm of the day to day – in terms of how to respond. The event took the audience through a scenario plotting different challenges faced by "Chapter Willis Clydes", an imaginary global diversified manufacturing company which pledged to become carbon-neutral by 2050. The audience voted in advance on the future "environment" our company would face, with Scenario C – "It's getting hot in here" being the chosen future with 49% of the vote. As humans, we find it very hard to foresee a future that is radically different from the past.
– Central climate risk committees - should the company have a central climate change risk committee or delegate responsibility to individual heads of departments? – The value of creating a climate risk register – to assess current and future physical risks. Sophisticated tools can be used to measure the cost/ benefit ratio of certain mitigation measures, map risk and evaluate and forecast hazard and exposure, so that companies are fully informed and can adapt strategy accordingly – Balancing competing duties and risks – while obtaining information on climate risks is vital, it can create dilemmas in terms of how to respond. With several real-life proposed investments being challenged in the courts, decision making must be well-documented to avoid exposure to liability risk – Avoiding “greenwashing” – as companies strive to meet net zero goals, reputational risk could result from allegations of “greenwashing”. Companies keen to demonstrate their green credentials as a source of competitive advantage beware: make sure you can deliver
Natalia Dorfman, Clyde & Co
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