Which climate scenarios matter for your organization? Both RCPs and SSPs are specific types of climate change scenarios that offer critical foundations for corporate climate risk assessment and opportunity mapping. RCPs provide standardized pathways for physical risk analysis, such as rising temperatures or extreme weather events. SSPs add the socioeconomic dimension, revealing how societal trends and policy choices could shape future exposures. By integrating both approaches, companies can run more robust stress tests, identify resilience strategies, and meet evolving regulatory demands. The IPCC AR6 emphasizes that combining RCPs with SSPs enables organizations to simulate a full spectrum of plausible futures—essential for forward-looking risk management and strategic planning.
Define your time horizon (short-, medium-, or long-term).
Select at least two scenarios (optimistic and pessimistic).
Use sector-specific tools or global datasets from the IPCC or NGFS.
Translate findings into clear action plans (investments, supply chains, reporting).
Update analyses regularly to reflect new policies and climate data.
Climate scenarios such as RCPs and SSPs are designed as plausible futures, not forecasts or predictions. All models incorporate significant uncertainties, especially regarding societal, economic, and political developments that are considered central uncertainty factors in climate scenario modeling, as well as regarding socioeconomic assumptions, future technology pathways, and changing regulatory frameworks. The Intergovernmental Panel on Climate Change AR6 underscores the importance of regularly updating scenario inputs and explicitly communicating uncertainty, using calibrated language and transparent datasets. High-emission scenarios like SSP5-8.5 remain valuable for stress testing, even as current energy trends shift. For effective decision-making, scenarios should always be used as decision-support tools—never as precise outcome forecasts. There is scientific consensus that all RCP scenarios will lead to dramatic changes in the global climate, regardless of the assumed emission pathways.
What you should know:
RCPs illustrate how greenhouse gas concentrations and temperatures could develop by 2100. For example, RCP8.5 projects a global mean temperature increase of up to 4.8°C by 2100, while RCP 2.6 aims to keep warming below 2°C (IPCC AR5). RCP 4.5 could lead to a temperature increase between 2°C and 3°C by 2100.
SSPs describe possible social and economic developments that influence these emissions, such as population growth, economic trends, and policy choices (DKRZ).
Both scenarios are essential for complying with regulations such as the CSRD and the EU Taxonomy.
Recommendation: Select scenario combinations directly aligned with CMIP6/IPCC AR6 standards. For Paris-aligned planning and sustainable strategies and risk management, use SSP1-1.9 or SSP1-2.6; for intermediate, use SSP2-4.5; for stress-testing and resilience, SSP3-7.0 and SSP5-8.5 offer robust frameworks. This dual-scenario approach is endorsed by the Task Force on Climate-related Financial Disclosures (TCFD) and enables practical, forward-looking risk management. RCP 2.6, in particular, requires very ambitious emissions reductions to meet the Paris climate target.
Representative Concentration Pathways (RCPs) are concentration pathways used to project future greenhouse gas concentrations in the atmosphere. They are based on different greenhouse gas concentrations in the atmosphere and do not directly describe emissions, but rather the resulting concentrations. The RCP scenarios were officially introduced by the IPCC. The term Representative Concentration Pathway (RCP) has been used since the Fifth Assessment Report of the Intergovernmental Panel on Climate Change to describe scenarios for greenhouse gas concentrations. RCPs are central to climate modeling as they provide standardized development pathways for global temperature projections and risk assessments. The RCP scenarios are based on historical greenhouse gas emissions up to 2005, thus providing a robust foundation for modeling future climate developments. Additionally, the RCP scenarios represent a broader selection of climate scenarios published in scientific literature, offering a comprehensive framework for analysis. The RCPs provide data on the respective concentrations of greenhouse gases.
The original four RCPs—RCP 2.6, RCP 4.5, RCP6.0, and RCP8.5—are named after the expected radiative forcing ranging from 2.6 to 8.5 W/m² between 1750 and 2100. These values reflect the range of radiative forcing achieved through different greenhouse gas concentrations. The higher the RCP value, the greater the temperature increase and the impacts of climate change. For example, RCP 8.5 is often referred to as a "business-as-usual" scenario and projects severe consequences if emissions continue to rise unchecked (Carbon Brief). The radiative forcing of RCP 4.5 stabilizes at 4.5 W/m² by 2100. RCP 8.5 is widely regarded as the worst-case scenario for climate change, illustrating the severe consequences of unabated emissions. Model calculations using various climate models show significant differences in global temperature increase and sea level rise when comparing RCP scenarios. The description of individual scenarios enables analysis of their respective impacts on temperature and climate.
In the Sixth Assessment Report of the Panel on Climate Change, new RCPs were introduced alongside the original pathways: RCP1.9, RCP3.4, and RCP7. RCP1.9 aims to limit global warming to below 1.5°C. RCP 2.6 requires that CO₂ emissions decrease starting in 2020 and reach net-zero by 2080. This pathway is consistent with the Paris Agreement and aims to keep warming well below 2°C. RCP 4.5 represents a medium stabilization scenario where emissions peak around 2040 and then decline. RCP6.0 assumes that emissions peak around 2080 and then decline, while RCP8.5 describes a world with continuously increasing emissions until 2100. The selection of scenarios depends on the specific application context and risk assessment needs. Companies are increasingly required to integrate these scenarios into their climate risk analyses to support informed strategic planning aligned with the goals of the Panel on Climate Change.
The different RCP scenarios show a wide range of possible climate futures. RCP 2.6 is an ambitious mitigation scenario that requires rapid and comprehensive emissions reductions to limit warming to approximately 1.5–2°C. This pathway assumes rapid technological progress, extensive use of renewable energy, and potentially negative emission technologies. RCP 4.5 represents an intermediate scenario where climate policy measures are implemented but not as aggressively as in RCP 2.6. Temperature increases under this pathway would reach approximately 2–3°C by 2100. RCP6.0 is a stabilization scenario with delayed but eventual emissions reductions, leading to warming of around 3–4°C. RCP8.5 represents the high-emission end of the spectrum with warming potentially exceeding 4°C by 2100 if no significant climate policy interventions occur.
Each scenario has distinct implications for businesses. Under RCP 2.6, companies must prepare for stringent climate policies, rapid decarbonization requirements, and potential carbon pricing mechanisms. The transition risks are significant but physical climate risks are minimized. RCP 4.5 presents a balance between transition and physical risks, requiring moderate adaptation measures and gradual decarbonization. RCP8.5 scenarios are particularly useful for stress-testing business models against severe physical climate impacts such as extreme weather events, sea-level rise, and disruptions to supply chains. Understanding these differences enables organizations to develop robust strategies that account for multiple plausible futures.
Shared Socioeconomic Pathways (SSPs) extend climate scenario analysis by incorporating socioeconomic factors such as population growth, economic development, technological innovation, and governance structures. While RCPs focus on physical climate outcomes, SSPs describe alternative societal development pathways that influence both emissions trajectories and adaptive capacity. Five main SSP narratives were developed by the climate research community to represent a wide spectrum of challenges for climate mitigation and adaptation.
SSP1 (Sustainability) describes a world that shifts toward more sustainable practices with emphasis on education, health, and environmental protection. Inequalities are reduced, technological innovation is rapid, and fossil fuel dependency decreases. This pathway aligns well with ambitious climate targets and corresponds to scenarios like SSP1-1.9 or SSP1-2.6.
SSP2 (Middle of the Road) represents a continuation of current trends with moderate but uneven progress toward sustainable development. Some regions achieve significant progress while others lag behind. This narrative typically pairs with intermediate forcing scenarios like SSP2-4.5.
SSP3 (Regional Rivalry) envisions a fragmented world with increasing nationalism, regional conflicts, and barriers to international cooperation. Investments in education and technology are limited, and adaptive capacity varies greatly across regions. This pathway often corresponds to higher emission scenarios.
SSP4 (Inequality) depicts a world of stark inequalities where high-income regions maintain advanced technologies and environmental protection while low-income areas face significant challenges. Economic stratification is pronounced and climate policy implementation is uneven.
SSP5 (Fossil-Fueled Development) describes rapid economic growth driven by conventional fossil fuel exploitation and intensive resource use. Technological optimism is high, but environmental concerns take a backseat to economic priorities. This pathway typically corresponds to RCP8.5.
SSPs enable companies to assess how different socioeconomic futures influence their business environment beyond purely physical climate risks. For example, a company operating in the renewable energy sector would face vastly different market conditions under SSP1 (strong policy support, growing demand) versus SSP5 (fossil fuel dominance, limited market expansion). Supply chain managers can use SSPs to evaluate how trade patterns, labor availability, and regulatory environments might evolve under different socioeconomic conditions.
When combined with RCPs, SSPs create integrated scenario frameworks. The notation SSP1-2.6, for instance, combines the SSP1 narrative (sustainable development) with the RCP 2.6 forcing pathway (ambitious mitigation). This integrated approach, recommended by both the IPCC and the NGFS (Network for Greening the Financial System), provides a more comprehensive foundation for strategic planning than either framework alone.
Climate scenarios are no longer optional for many companies. The EU's Corporate Sustainability Reporting Directive (CSRD) requires companies to conduct climate scenario analysis as part of their sustainability reporting. The EU Taxonomy Regulation also expects companies to demonstrate that their economic activities are aligned with climate scenarios consistent with limiting warming to 1.5°C or well below 2°C. Financial institutions face similar requirements under frameworks such as the ECB's climate stress testing guidelines.
To meet these requirements, companies should select at least two scenarios: one aligned with the Paris Agreement (typically SSP1-1.9 or SSP1-2.6) and one representing a higher emission pathway (such as SSP2-4.5 or SSP3-7.0) for stress-testing purposes. The analysis should assess both transition risks (policy changes, technology shifts, market transformations) and physical risks (extreme weather, chronic changes to temperature and precipitation patterns) across relevant time horizons—typically short-term (to 2030), medium-term (to 2050), and long-term (to 2100).
Climate scenarios enable systematic identification and quantification of climate-related risks. Physical risks include damage to assets from extreme weather events, disruptions to supply chains, increased operational costs from temperature changes, and reduced productivity in heat-sensitive sectors. Transition risks encompass policy and regulatory changes (carbon pricing, emissions regulations), technology shifts (stranded assets in fossil fuel sectors), market changes (shifting consumer preferences), and reputational risks.
Effective risk management requires translating scenario outputs into specific business impacts. For example, a manufacturing company might use RCP 4.5 to assess how changing precipitation patterns could affect water availability at key production sites, while using SSP scenarios to evaluate how different policy environments might influence carbon pricing exposure. The TCFD framework provides detailed guidance on incorporating scenario analysis into enterprise risk management systems.
Climate scenarios also reveal strategic opportunities. Companies can identify growing markets for climate solutions, anticipate regulatory changes that favor low-carbon products, and develop offerings aligned with future customer needs. Renewable energy companies, electric vehicle manufacturers, and energy efficiency providers face dramatically different opportunity spaces under RCP 2.6 versus RCP8.5 scenarios.
Scenario analysis can inform research and development priorities, guide capital allocation decisions, and shape long-term business strategy. Companies that proactively align their business models with low-carbon transition pathways position themselves advantageously as climate policies tighten and markets evolve. This strategic foresight is particularly valuable in sectors facing potential disruption from climate change and decarbonization trends.
Several authoritative sources provide climate scenario data and analysis tools. The IPCC's Assessment Reports remain the gold standard for climate science and scenario frameworks. The IPCC Data Distribution Centre offers downloadable datasets for RCP and SSP scenarios. Climate models from institutions like the NASA Earth Exchange, the Copernicus Climate Change Service, and national climate centers provide high-resolution projections for specific regions and variables.
The Network for Greening the Financial System (NGFS) has developed scenarios specifically tailored for financial risk assessment, combining climate science with macroeconomic modeling. These scenarios are widely used by central banks, financial supervisors, and financial institutions for climate stress testing. The Climate Impact Explorer and the World Bank's Climate Change Knowledge Portal offer user-friendly interfaces for exploring climate projections under different scenarios.
The Task Force on Climate-related Financial Disclosures (TCFD) provides comprehensive guidance on conducting climate scenario analysis. Their recommendations include defining the scope of analysis, selecting appropriate scenarios, identifying climate-related risks and opportunities, evaluating potential business impacts, and developing response strategies. The Science Based Targets initiative (SBTi) offers methodologies for setting emissions reduction targets aligned with climate science.
Many consulting firms and specialized providers offer scenario analysis services and software tools. These range from sector-specific models (for example, agricultural yield models under different climate scenarios) to enterprise-wide risk assessment platforms. The choice of tools depends on organizational needs, technical capabilities, data availability, and reporting requirements.
Scenario selection should reflect the organization's specific risk profile, sector characteristics, geographic exposure, and time horizons of interest. A minimum of two scenarios is recommended: one aligned with ambitious climate action (RCP 2.6 or SSP1-2.6) and one representing higher emissions (RCP 4.5, SSP2-4.5, or higher). Including a high-emission scenario (RCP8.5 or SSP5-8.5) for stress-testing purposes is increasingly common, even as energy transition trends make this pathway less probable.
Consider sector-specific factors when choosing scenarios. Energy-intensive industries should evaluate transition risks under low-carbon pathways, while agriculture and infrastructure sectors must emphasize physical risk assessment. Companies with global operations should account for regional variations in climate impacts and policy environments. Time horizons should align with asset lifespans, investment cycles, and strategic planning periods.
Effective scenario analysis follows a structured process. First, define the scope by identifying key business areas, geographic locations, and time horizons to assess. Second, gather relevant data on climate projections, socioeconomic trends, and business operations. Third, translate climate variables into business-relevant metrics—for example, converting temperature and precipitation changes into operational cost impacts or revenue effects.
Fourth, assess both direct and indirect impacts. Direct impacts include physical damage to assets or disruptions to operations. Indirect impacts encompass supply chain effects, market shifts, regulatory changes, and reputational factors. Fifth, quantify impacts where possible, while acknowledging uncertainties. Even qualitative assessments provide valuable strategic insights when quantification is challenging.
Scenario analysis is only valuable if its insights inform decision-making. Results should be communicated clearly to leadership, translated into actionable strategies, and embedded in planning processes. Risk mitigation measures might include diversifying supply chains, upgrading infrastructure to withstand extreme weather, or adjusting product portfolios toward lower-carbon offerings.
Opportunity capture strategies could involve investing in climate solutions, developing new products for emerging markets, or positioning the company as a leader in sustainability. Regular monitoring and updating of scenario analyses ensures strategies remain relevant as climate science, policies, and business conditions evolve. Leading companies integrate climate scenarios into capital allocation frameworks, strategic planning cycles, and performance management systems.
Climate scenario frameworks continue to evolve as scientific understanding advances and new data becomes available. The IPCC's ongoing assessment cycles incorporate improved climate models, refined projections, and better integration of socioeconomic factors. Emerging approaches include probabilistic scenarios that explicitly quantify uncertainties, higher-resolution regional projections, and scenarios that better capture tipping points and non-linear climate system responses.
The integration of artificial intelligence and machine learning is enhancing scenario modeling capabilities, enabling more sophisticated analysis of complex interactions between climate, economy, and society. Downscaling techniques are improving, allowing companies to access more granular, location-specific projections. These advances will make scenario analysis more accurate and actionable for businesses.
Regulatory requirements for climate scenario analysis are expanding globally. Beyond the EU's CSRD and Taxonomy, jurisdictions including the UK, Singapore, Hong Kong, and others are implementing mandatory climate disclosure frameworks that include scenario analysis. The International Sustainability Standards Board (ISSB) has developed global baseline standards that incorporate scenario analysis requirements, likely to be adopted widely.
Financial regulators are increasingly using climate scenarios for supervisory stress testing of banks and insurers. Central banks are exploring how climate scenarios should inform monetary policy and financial stability assessments. This regulatory evolution means that robust scenario analysis capabilities will become essential for companies across all sectors, not just those in high-emission or climate-vulnerable industries.
Climate scenarios are powerful tools for navigating uncertainty and building resilience in a changing world. RCPs and SSPs provide complementary perspectives—physical climate futures and socioeconomic development pathways—that together enable comprehensive risk assessment and strategic planning. While scenarios cannot predict the future, they illuminate the range of plausible outcomes and help organizations prepare for multiple possible worlds.
Successful implementation requires more than technical analysis. It demands clear communication of results, integration into decision-making processes, and commitment to updating analyses as conditions change. Companies that embrace scenario thinking as part of their strategic culture will be better positioned to thrive amid climate change and the global transition to a low-carbon economy. As regulatory pressure intensifies and stakeholder expectations evolve, proactive engagement with climate scenarios is no longer optional—it is essential for proactive strategies in the face of climate change.
How can this be implemented in practice? Choose two scenarios: one aligned with Paris goals and one reflecting current trends. Use tools like the Climate Atlas or the Climate Impact Explorer to conduct robust climate impact analyses.
Regulations such as the CSRD or the EU Taxonomy require precise disclosures about climate risks. Scenario analyses are crucial here. Companies of all sizes can benefit by annually selecting appropriate scenarios tailored to their industry, region, and specific risks.
Equally important is regular updating of these analyses. Climate projections and economic frameworks change constantly—only those who adapt their strategies remain capable of action and successful in the long term.
Companies can combine RCP and SSP scenarios to make informed decisions in dealing with climate risks. While Representative Concentration Pathways (RCPs) provide scientific forecasts of possible climate developments based on insights from climate change research, Shared Socioeconomic Pathways (SSPs) show how socioeconomic developments influence emissions and their impacts. These scenarios were developed by scientists and are based on extensive literature encompassing scientific studies, professional articles, and references on climate scenarios, modeling approaches, and emission pathways. Combining both approaches enables in-depth analysis of physical risks and economic frameworks. The IPCC recommends this integrated approach for robust climate risk management.
With the help of these scenarios, companies can develop targeted strategies to prepare for various climate scenarios. This includes not only complying with regulatory requirements such as the CSRD and EU Taxonomy, but also developing sustainable business models. Especially in Germany, where climate protection and decarbonization play a central role, these scenarios provide a valuable foundation for long-term planning and ESG strategies.
Companies can effectively incorporate climate scenarios into their strategies by relying on proven methods and models. A tried-and-tested approach is to develop at least three different scenarios to map out various possible futures, often using climate models that simulate different emission scenarios and their impacts on the climate. This approach makes it easier to assess potential risks and opportunities more precisely. The TCFD and NGFS both provide guidance and toolkits for scenario analysis.
Scenario analysis tools, climate models, and best-practice frameworks play a crucial role. They help identify climate-related risks and develop strategies for adaptation or decarbonization. In addition, they support companies in achieving ESG goals and complying with regulations such as the CSRD or EU Taxonomy.
By combining these tools, climate models, and approaches, companies gain a stronger foundation for strategic planning and are better equipped to respond to future challenges.
RCPs (Representative Concentration Pathways) and SSPs (Shared Socioeconomic Pathways) are indispensable instruments for analyzing the impacts of climate change. A detailed description of these scenarios helps clarify the differences between models and assumptions, making the scenarios transparent for scientific assessments and decision-making. They support companies in making informed decisions when dealing with climate risks and seizing opportunities. These scenarios provide a solid foundation for strategically adapting sustainability strategies and making them future-proof.
Furthermore, RCPs and SSPs facilitate compliance with the requirements of the CSRD (Corporate Sustainability Reporting Directive) and the EU Taxonomy. They form the basis for forward-looking analysis of climate impacts. By integrating these scenarios into your processes, you can optimize your reporting, better manage risks, and effectively implement decarbonization strategies. The underlying scientific literature, such as the IPCC AR6 and Carbon Brief's SSP explainer, provides further information and references on the climate scenarios and modeling approaches used.
The most common mistake is treating scenarios as forecasts rather than plausible futures. This can lead to overconfidence in a single pathway. Best practice is to work with a range of scenarios, update them regularly, and combine them with qualitative expertise from within the organization.
Experts recommend updating scenario analyses every one to two years, or whenever there are major changes in regulatory policies, energy markets, or business strategy. Climate risks and opportunities evolve dynamically, so scenario planning should reflect this pace of change.