Choosing the Right RCP Scenario: A Strategic Guide for Climate-Resilient Business Planning

Choosing the right RCP scenario (Representative Concentration Pathways) is crucial for preparing your company to face the challenges and seize the opportunities of climate change. These scenarios model possible developments in greenhouse gas concentrations and their impacts—from moderate changes (RCP 2.6) to drastic scenarios (RCP 8.5). Depending on your industry, location, and objectives, you need to decide which scenario best fits your strategy. Understanding and selecting the appropriate RCP scenario is not just a technical exercise; it’s a strategic imperative that can shape your company’s resilience and competitive advantage in a rapidly changing world. According to the Intergovernmental Panel on Climate Change (IPCC), the choice of scenario can significantly influence risk assessments and long-term planning, especially as regulatory and investor expectations around climate disclosure continue to rise (source).

• RCP 2.6: Low emissions, focus on transition risks (e.g., new technologies, regulations).
• RCP 8.5: High emissions, focus on physical risks (e.g., extreme weather events).
• By 2050: Differences between scenarios are often minor, but become more pronounced in the long term.
• Recommendation: Use at least two scenarios to cover uncertainties.

With clear analysis and targeted actions, you can minimize risks, meet regulatory requirements, and identify new business opportunities. This guide shows you how to effectively integrate RCP scenarios into your planning, drawing on best practices from leading organizations and the latest climate science.

RCP Scenarios Explained: Differences and Impacts on Businesses

In this section, we take a closer look at the RCP scenarios, their key features, industry-specific impacts, and their significance in assessing climate-related risks. Understanding these differences is essential for robust scenario analysis and for aligning your company’s strategy with the realities of a changing climate.

RCP 2.6, 4.5, 6.0, and 8.5: Key Features

The RCP scenarios mainly differ in their emission pathways and the resulting climate impacts. RCP 2.6 describes a scenario where CO₂ emissions steadily decline from 2020 and are eliminated by the end of the century. This scenario aims to keep global temperature rise below 2°C by 2100, aligning with the Paris Agreement’s most ambitious goals (source).

RCP 4.5 represents a middle-ground scenario, with emissions peaking around 2040 and declining from about 2045 onwards. By 2100, emissions are reduced to about half of 2050 levels, potentially resulting in a temperature increase between 2°C and 3°C.

The RCP 6.0 scenario describes a later peak in emissions around 2080, followed by a decline. By 2100, a CO₂ concentration of about 670 ppm is expected, likely leading to a temperature rise of 3–4°C.

RCP 8.5 illustrates a scenario with unchecked emission growth throughout the 21st century. CO₂ concentrations could reach about 2,000 ppm by 2100—almost seven times pre-industrial levels—and only stabilize around 2250. This scenario is often used as a “worst-case” or high-risk benchmark, though recent studies suggest actual emissions may be tracking closer to RCP 4.5 or RCP 6.0 due to policy interventions and technological change (source).

For business planning, it is especially relevant that differences between scenarios are often minor until mid-century. This is because the climate system responds slowly to changes in greenhouse gas concentrations. Over longer timeframes, however, the differences become more pronounced and should be considered in strategic decisions. For example, the IPCC’s Sixth Assessment Report highlights that by 2100, global mean sea level rise could range from 0.29 meters under RCP 2.6 to 0.98 meters under RCP 8.5, dramatically altering risk profiles for coastal infrastructure (source).

How Different Industries Are Affected

The impacts of RCP scenarios vary significantly by industry. Under RCP 8.5, faster warming and more pronounced changes in river flows, water temperatures, and precipitation patterns are expected. In contrast, differences between RCP 2.6 and RCP 4.5 remain relatively moderate until the end of the century. For example, the CDP identifies sectors such as agriculture, utilities, and insurance as particularly vulnerable to physical climate risks, while sectors like automotive and energy face significant transition risks due to policy and technology shifts (source).

For manufacturing companies, this means supply chains may need to be adapted. Under RCP 2.6, transition risks from new technologies and regulations are the main concern, while under RCP 8.5, physical risks from extreme weather events dominate. A good example is Carter's, which conducted a climate risk analysis in 2022. Both the optimistic RCP 2.6 and the pessimistic RCP 8.5 scenarios were analyzed to assess potential impacts on business, supply chains, and cotton sourcing. The analysis showed that climate change presents not only challenges but also strategic opportunities in the long run.

In the insurance industry, the focus is on distinguishing between acute and chronic physical risks. Acute risks involve the increase in extreme weather events, while chronic risks include long-term changes such as rising sea levels or altered climate patterns. The choice of scenario determines whether minor adjustments to risk models are sufficient or if extensive recalculations are necessary. For example, Swiss Re estimates that climate change could reduce global GDP by up to 18% by 2050 under a severe scenario, underscoring the importance of scenario selection for financial planning (source).

Using RCP Scenarios to Assess Climate Risks

RCP scenarios provide a valuable foundation for conducting precise climate risk analyses. These analyses help companies better understand climate-related challenges and prepare for possible developments. A distinction is made between physical risks—such as extreme weather events—and transition risks arising from technological, regulatory, and economic changes necessary for a low-carbon economy.

A major advantage of these analyses is that they enable companies to better manage uncertainties associated with climate change. The choice of scenarios should be tailored to the specific circumstances of the company, including industry, location, and risk profile. Transparency in justifying scenario selection builds stakeholder trust in your climate strategy. The Task Force on Climate-related Financial Disclosures (TCFD) recommends using multiple scenarios to stress-test business models and ensure resilience (source).

Many companies integrate so-called “triggers” into their strategies to respond quickly to specific climate changes. Climate scenario analyses should not be seen merely as a compliance tool, but as a strategic instrument deeply embedded in risk management processes. They form the basis for aligning ESG strategies with climate risks and building long-term resilience.

Step-by-Step Guide to Choosing the Right RCP Scenario

A structured approach is key to selecting the appropriate RCP scenario in line with your business objectives. Here are the main steps and criteria to support your decision-making, drawing on guidance from the IPCC, TCFD, and leading industry practice.

Define Your Business Goals and Priorities

As mentioned in previous sections, considering climate risks is a core element of a future-oriented business strategy. But how do you put this into practice? Scenario analyses help you challenge existing assumptions about the future and assess the relevance of climate-related risks and opportunities for your company.

Plan across different time horizons. While differences between scenarios are often minor until mid-century, they become much more noticeable over longer periods. Companies with long investment cycles—such as those in energy or infrastructure—require a different strategy than those with shorter planning horizons. For example, utilities investing in power plants with 40-year lifespans must consider climate impacts well beyond 2050 (source).

Another key point: Integrate scenario analysis into your strategic planning and risk management. The choice of a scenario should always be part of a broader framework that includes decarbonization, resilience, and regulatory requirements.

Key Factors for Your Decision

The impacts of climate change on your business can vary greatly—depending on your industry, the geographic location of your value chain, the assets used, and your supply and demand markets. You should consider these differences when selecting your scenarios.

• Rely on scenario diversity: Relying on just one scenario risks blind spots. The TCFD recommends using at least two scenarios. This helps you better cover uncertainties and make your strategies more resilient.
• Use internationally recognized scenarios: For better comparability and credibility, it makes sense to use scenarios from organizations such as the IPCC, the IEA, or the NGFS.

Decision Matrix for Scenario Selection

A decision matrix can help you systematically evaluate the various factors and select the most suitable scenario. For example, the TCFD’s guidance provides templates for mapping business exposure to different climate pathways, helping companies identify where their strategies are most vulnerable (source).

This matrix allows you to assess the potential resilience of your strategic plans against different scenarios. Analyze the strategic and financial impacts of each scenario to identify possible vulnerabilities. For instance, a company with global supply chains may find that RCP 8.5 exposes it to more frequent disruptions from extreme weather, while RCP 2.6 may require greater investment in low-carbon technologies.

Transparency is key: Carefully document your assumptions, parameters, and decisions to ensure comparability of results across scenarios. This makes it easier to clearly communicate your choices to stakeholders.

Don’t forget to update the decision matrix regularly. Scenario analyses are a dynamic process, and climate scenarios are constantly evolving. Adjust your selection as new insights or changes in your business strategy arise. This way, you’ll always stay up to date.

How to Use RCP Scenarios in Your Business Planning

Choosing a suitable RCP scenario is only the first step. To address climate risks and opportunities effectively, you must integrate the results into your strategic planning. Here’s how to incorporate these insights into resilience and decarbonization plans, drawing on real-world examples and global frameworks.

Building Resilience and Decarbonization Plans

RCP scenarios allow you to develop measures early on to prepare for changing climate conditions. This approach enables you to act proactively rather than merely react to changes.

Your planning should differ depending on the time horizon:

• Short-term: Operational measures such as factoring in CO₂ prices or adapting supply chains. For example, the EU Emissions Trading System (ETS) is expected to drive up carbon prices, impacting operational costs (source).
• Medium-term: Deploying technical solutions to achieve global sustainability goals (SDGs).
• Long-term: Strategies to achieve climate neutrality. Companies like Microsoft and Unilever have set net-zero targets for 2030 and 2039, respectively, demonstrating the importance of long-term planning (source).

A good example is Nestlé Germany: In 2021, the company used climate scenarios to improve its supply chain analysis and develop a transformation strategy.

For decarbonizing your production sites, you should first increase energy efficiency. This delivers quick wins and lays the foundation for further steps. Analyze your asset portfolio to understand how you can access CO₂-free electricity, hydrogen, biomass, or technologies such as CCS (Carbon Capture and Storage). The International Energy Agency (IEA) highlights that energy efficiency improvements could deliver more than 40% of the emissions reductions needed to meet global climate goals (source).

Meeting Regulatory Requirements

Beyond internal alignment, RCP scenarios also support compliance with external requirements. So far, only about 10% of the largest companies have conducted a scenario analysis, but regulations such as the CSRD, the EU Taxonomy, and the ESRS are making this increasingly necessary. A two-step approach is advisable: first, a qualitative assessment of risks, followed by a detailed quantitative analysis.

The TCFD framework explicitly recommends that companies conduct scenario analyses to better understand the potential impacts of climate change.

Transparent documentation of your scenario analyses—including assumptions, parameters, and decision processes—not only makes regulatory compliance easier but also strengthens the trust of investors and other stakeholders. According to a 2023 KPMG survey, 74% of investors say they are more likely to invest in companies with transparent climate scenario analysis and disclosure (source).

Leveraging Results for Innovation and Risk Management

Analyzing climate scenarios not only paves the way for compliance but also opens up opportunities for innovation and improved risk management. It enables you to assess the potential impacts of climate change on your business model while strengthening stakeholder trust.

Implement the climate resilience cycle as a fixed component of your business processes. This allows you to continuously adapt your capabilities and respond to new insights and changing conditions.

Depending on your goals and challenges, different scenario approaches are suitable:

• Predictive and exploratory scenarios: Useful for assessing climate change impacts in stable areas.
• Exploratory and normative scenarios: Suitable for planning in dynamic and changing fields.

In addition, scenario analysis results can reveal innovation potential. More than half of all countries worldwide have set net-zero targets by 2050, and around 20% of the world’s largest companies pursue similar goals as part of the UN “Race to Net Zero Coalition”. These developments are creating new markets and business opportunities that you can identify and leverage through early analysis. For example, the global market for low-carbon technologies is projected to reach $4 trillion by 2030 (source).

This is especially relevant for industrial companies, as the industrial sector in the US accounts for about 30% of domestic greenhouse gas emissions. There is great potential for change and new business areas here (source).

Tools, Resources and Professional Support

To successfully conduct RCP scenario analyses, you need not only reliable data but also specialized tools. Professional consulting is often crucial to properly classify the complex connections between climate scenarios and your business strategy. Here you'll find an overview of recommended tools, data sources and support options.

Recommended Tools and Data Sources

For companies in Germany, there are a number of high-quality data sources that enable well-founded scenario analyses. The Climate Change Knowledge Portal (CCKP) is a central resource that provides historical and projected climate data for Germany. It offers, among other things, mean projections from CMIP6 and is particularly helpful when you need detailed regional climate projections.

The RCP Database provides data on emissions, concentrations and land use changes within the framework of the Representative Concentration Pathways. This database is indispensable if you want to create your own models or verify existing analyses.

Depending on the level of analysis, different data types are available that enable both large-scale and site-specific considerations:

For getting started, it's recommended to first use national data to meet regulatory requirements. Subsequently, you can incorporate regional data to more precisely assess risks at individual locations. This allows you to precisely implement the strategies described in the previous sections.

After selecting the appropriate data sources, Fiegenbaum Solutions shows you how to transform these insights into concrete measures.

How Fiegenbaum Solutions Can Support You

Fiegenbaum Solutions helps companies integrate sustainability into their strategies, data analyses, implementations and training. The goal: to link sustainability and business objectives in such a way that RCP scenario analyses enable informed decisions.

Services include, among others:

• Support in climate risk management, including the capture of CO₂ emissions and the implementation of reduction measures.
• Integration of climate risk management into existing risk management systems.
• Compliance with regulatory requirements, such as sustainable reporting according to CSRD starting in 2024.

One example is the collaboration with Konfidens, a provider of mental health solutions. With support from Fiegenbaum Solutions, the company was able to reduce its ecological footprint and successfully implement ESG measures. Furthermore, Fiegenbaum Solutions offers detailed analyses and strategies for reducing greenhouse gas emissions (Scope 1 to Scope 3) according to the GHG Protocol.

You'll learn more about how the collaboration can be structured in the next section.

Flexible Cooperation Models

Fiegenbaum Solutions adapts the collaboration individually to the requirements and context of your company. You can choose from three main models:

• Project-based consulting: Ideal for specific topics such as creating an ESG roadmap.
• Retainer agreements: For regular support in the areas of sustainability and compliance.
• Startup support: Special conditions for companies in the early phase or with a focus on impact.

After an initial conversation, you'll receive a detailed proposal that transparently presents the scope of work, schedule and costs. This way, you can plan your investment in RCP scenario analyses in a targeted manner and realistically assess the benefits for your company.

Summary: Key Insights and Next Steps

Choosing the right RCP scenario is a central building block for your long-term corporate strategy. These scenarios range from stabilizing approaches to those predicting significant temperature increases – and each requires different strategic measures.

When selecting a scenario, you should consider three essential aspects: the climate-related risks specifically relevant to your industry and locations, regulatory requirements such as the CSRD effective from 2024, and the expectations of your stakeholders. Particularly the high expectations of consumers make transparent climate strategies indispensable.

A sensible starting point is a financial materiality analysis that illuminates climate-related risks. This analysis helps you identify the financially most important areas for action. Building on this, you can establish a clear and comprehensible process for climate scenario analysis – including governance documents and templates.

Once the core areas are defined and the analysis process is in place, adapt the results to your specific corporate context. Consider the particularities of your industry, locations and risk profiles. This strengthens stakeholder confidence and shows that you're addressing your company's individual challenges.

Since climate scenario analyses are constantly evolving, it's important to regularly review your assumptions. Integrate new insights on technologies, policy measures and market developments so that your strategy remains relevant and implementable under changing conditions.

Leverage available tools to strengthen your analytical capabilities. This allows you not only to better assess risks but also to identify new business opportunities. These measures integrate seamlessly into your comprehensive ESG strategy and prepare your company for future challenges. Use this guide as a first step and refine your analysis with professional support to remain successful in the long term.

FAQs

How can companies integrate the appropriate RCP scenario into their strategic planning?

Companies can effectively integrate RCP scenarios into their strategic planning by analyzing and evaluating different scenarios – such as optimistic, realistic and pessimistic approaches – in detail. This involves considering the possible impacts of each scenario on climate risks, regulatory requirements and long-term emission reduction goals.

A central step is the clear assignment of responsibilities within corporate management. It's equally important to regularly update scenario analyses to be able to respond to new developments. The insights gained should flow directly into strategic planning to strengthen the company's resilience and achieve the targeted decarbonization goals. This enables informed decisions and future-proof strategy alignment.

Why is it beneficial to include multiple RCP scenarios in corporate strategy and risk management?

Considering different RCP scenarios opens up opportunities for companies to specifically prepare for different possible impacts of climate change. This allows for more comprehensive risk assessment and more flexible strategy design. This not only strengthens resilience but also supports planning that is sustainable and future-oriented in the long term.

By incorporating different scenarios, informed decisions can be made that consider both short-term and long-term goals in the areas of climate risks and decarbonization. This way, companies can implement their ESG goals more efficiently while better adapting to regulatory requirements.

How do different RCP scenarios affect various industries, and what factors should companies consider when selecting them?

The impacts of RCP scenarios on different industries vary significantly. Each scenario brings specific physical risks, such as extreme weather, flooding or heat waves. These risks affect companies differently, depending on their location, infrastructure and supply chain dependencies.

When selecting an appropriate scenario, regional characteristics, energy consumption, regulatory requirements and long-term sustainability goals should play a central role. This allows for better management of industry-specific risks while specifically leveraging opportunities – for example in the area of decarbonization.

A well-founded scenario selection helps companies not only achieve ESG goals but also develop more resilient strategies and secure their long-term competitiveness.