# Which NGFS climate scenario should I use for scenario analysis?

Canonical: https://senseible.earth/answers/which-ngfs-scenario-should-i-use

Use at least three, one from each NGFS family: an orderly scenario such as Net Zero 2050 or Below 2°C, a disorderly one such as Delayed Transition, and a hot house world such as Current Policies. The first two test transition risk, the last tests physical risk. IFRS S2 also asks whether one scenario is aligned with the Paris Agreement.

## The three NGFS families

The NGFS publishes scenarios in phases; Phase V came out in November 2024. Use the latest phase and name it.

- Orderly: climate policies start early and tighten gradually. Net Zero 2050 and Below 2°C sit here. Transition costs are real but spread out.
- Disorderly: action is late or uneven, so policies arrive suddenly. Delayed Transition is the usual choice. Transition risk is highest.
- Hot house world: only current or pledged policies are carried out, and warming is highest. Current Policies and NDCs sit here. Physical risk dominates.

## Matching scenarios to the question

- Carbon cost on your operations or borrowers: Net Zero 2050 and Delayed Transition give the steepest carbon price paths.
- Floods, heat and water stress at sites: Current Policies, over a horizon to 2050 or beyond, where physical effects show.
- Lender portfolio stress tests: follow the supervisor's set if it names one. The RBI's draft guidance on climate scenario analysis and stress testing points banks to scenario-based analysis.

## What IFRS S2 expects

IFRS S2 requires climate-related scenario analysis to assess resilience, using an approach that fits your circumstances. You must disclose which scenarios you used and their sources, the time horizons, and whether the analysis includes a scenario aligned with the latest international agreement on climate change. Using an NGFS orderly scenario meets that last point in most cases.

## Keep it proportionate

A small company does not need integrated models. Take the carbon price path from one orderly and one disorderly scenario, apply it to your Scope 1 and 2 emissions, and see what it does to margins. Then list your sites and check them against physical hazard data under a hot house scenario. Write down the assumptions.

## What Senseible does here

Senseible's climate risk service includes a carbon cost stress test, and its invoice-backed Scope 1 and 2 figures give the emissions base that a scenario's carbon price applies to. The choice of scenarios and their disclosure stay with you.

- [Climate risk assessment](https://senseible.earth/climate-risk)
- [Physical vs transition climate risk](https://senseible.earth/climate-intelligence/physical-vs-transition-climate-risk-financial-institutions)
- [Does IFRS S2 apply in India?](https://senseible.earth/answers/does-ifrs-s2-apply-in-india)
- [Carbon pricing impact calculator](https://senseible.earth/calculators/carbon-pricing-impact)

Sources: [IFRS S2 Climate-related Disclosures (ISSB, 2023), climate resilience and scenario analysis](https://www.ifrs.org), [RBI draft guidance note on climate scenario analysis and stress testing](https://www.rbi.org.in)

Last reviewed 2026-10-15. NGFS releases new scenario phases periodically; check for a newer phase than Phase V and update scenario names.