Mastering Climate Scenario Analysis Under ASRS: A Practical Guide to Building Climate Resilience

This is a sponsored article from SustainabilityTracker.com member &BLOOM Sustainability & ESG.

As the Australian Sustainability Reporting Standards (ASRS) come into effect, climate scenario analysis has become a vital requirement for businesses. But beyond compliance, it offers a unique opportunity to assess your organisation’s climate resilience and turn potential risks into strategic advantages.

You can check out the first article about the ASRS here.

---

Understanding Climate Resilience and Scenario Analysis

Climate resilience, as defined by ASRS, is an organisation’s capacity to anticipate, prepare for, and adapt to climate-related risks and opportunities. It’s about how ready your business is to respond to a range of possible climate futures.

Scenario analysis is the tool that makes this possible. It involves exploring different plausible climate scenarios — such as a world where global temperatures rise by 1.5°C or one where warming exceeds 2°C — and assessing their potential impacts on your business strategy, operations, and financial health.

This process helps identify not only the physical risks like extreme weather or sea level rise, but also transition risks, including policy shifts, technology changes, and evolving market preferences.

Key Reasons Scenario Analysis Matters

There are three crucial reasons to embrace climate scenario analysis:

1. Understanding impacts: It helps reveal how climate risks could affect your strategy and business model.
2. Navigating uncertainty: It highlights areas where assessing resilience is complex or uncertain.
3. Adapting over time: It gauges your organisation’s ability to evolve as climate conditions and market realities change.

Through this lens, scenario analysis becomes the foundation for informed decision-making and robust climate resilience.

Navigating Scenario Selection and Disclosure Requirements

ASRS requires businesses to disclose how they conducted scenario analysis, including:

• The climate scenarios chosen and their sources.
• The rationale for selecting those scenarios.
• The time horizons considered.
• The scope of operations included.
• Assumptions about policies, economics, technology, and regional factors.

Importantly, ASRS mandates analysing at least two contrasting scenarios: one aligned with limiting warming to 1.5°C and another representing a higher warming trajectory (exceeding 2°C).

Organisations often rely on well-established frameworks such as those from the International Energy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC). These provide scientifically grounded, plausible, and relevant scenarios that meet ASRS standards.

Implementing Scenario Analysis: The Four-Step Approach

To conduct a meaningful scenario analysis, businesses should follow a structured process:

1. Prepare: Identify the most relevant climate risks and opportunities and establish governance and accountability.
2. Select: Choose appropriate climate scenarios that reflect the organisation’s exposure and strategic context.
3. Describe: Analyse each scenario’s impact on business strategy, operations, and financial outcomes.
4. Respond: Adapt plans and strategies to manage risks and seize emerging opportunities.

While initial analyses can be qualitative, organisations should progressively incorporate quantitative data to enhance precision and decision-making confidence.

Tools and Techniques to Support Your Analysis

Numerous open-source and commercial tools can facilitate scenario analysis. Platforms like Aqueduct, WWF’s climate scenario datasets, and Climate Analytics offer valuable climate projections aligned with IPCC pathways.

These tools provide transparent methodologies and standardized data to support the inputs and assumptions critical to ASRS disclosures.

The Path Forward: Embedding Climate Resilience Into Business Strategy

Scenario analysis under ASRS is more than a compliance exercise — it is a strategic lens that helps organisations understand their vulnerabilities and opportunities in a climate-affected world. By embedding this process into governance and planning, businesses can enhance resilience, attract investment, and secure long-term value.

At &BLOOM, we specialise in helping organisations navigate this complex landscape, turning ASRS requirements into practical, actionable strategies that build climate resilience and competitive advantage.

---

This is an article from a SustainabilityTracker.com Member. The views and opinions we express here don’t necessarily reflect our organisation.