How can boards unlock the value of climate scenarios?

Climate scenarios are too often seen as purely technical exercises. They appear in workshops, disclosure reports, risk assessments, or sustainability presentations, but they frequently fail to influence the strategic conversations where they could create the most value.

The real value of climate scenarios lies in their ability to probe uncertainty, challenge assumptions, and understand how different climate, transition, policy, technology, and market conditions could affect the business over time.

How can you as a sustainability leader better use these powerful tools with your board?

Used well, scenarios can help boards ask sharper questions. What parts of the strategy are most exposed? Which assumptions about energy, infrastructure, insurance, supply chains, customers, regulation, or capital markets may no longer hold? Where could the business face downside risk, and where could it find advantage by moving earlier than competitors?

In this Q&A, Jimena Padilla speaks with David Carlin about how sustainability leaders can help their boards use climate scenarios as practical tools for strategy, resilience, and risk oversight, and how CSOs can translate scenario analysis into the board-level language of business value.

Q1. What’s the biggest challenge sustainability professionals face when introducing climate or transition scenarios to a board for the first time?

One of the biggest challenges is that climate scenarios can very quickly sound abstract, technical, and disconnected from the day-to-day realities of the business. You start talking about Shared Socioeconomic Pathways (SSPs), temperature pathways, disorderly transitions, and people’s eyes can glaze over quite quickly.

Most boards are not really asking, “What does this mean for the planet?” They are asking, “What does this mean for us?” What does it mean for our customers, our operations, our financing costs, our supply chain, our insurance coverage, or our long-term strategy?

I remember doing a workshop with a North American investor where the discussion initially felt quite theoretical. We were talking about climate pathways and transition scenarios, and the energy in the room was fairly low. But once we translated that into what it could mean for mortgage affordability, physical risks to collateral, insurance pricing, and political volatility, the discussion completely changed. Suddenly, it became a business conversation rather than a sustainability conversation.

That is often the role sustainability professionals need to play. You are translating large-scale systemic change into the practical realities executives are responsible for managing.

Q2. How do you structure scenarios so boards engage with them as strategic tools rather than theoretical exercises?

I usually try to start with strategic questions the board already cares about rather than climate science itself.

What could disrupt the business model? Which assumptions underpinning the strategy may no longer hold? Where are we exposed operationally or financially? How could customer behavior, regulation, technology, energy systems, or supply chains shift over time?

Once you frame it that way, scenarios become much more practical. They stop being academic exercises and start becoming tools for stress-testing strategy.

I also think it’s important to make the scenarios feel tangible. If you just stay at the level of emissions pathways or GDP impacts, the conversation can remain very distant. But if you say, “What happens if insurance becomes unavailable in certain markets?” or “What happens if repeated heatwaves disrupt labor productivity or grid reliability?” people engage very differently.

I recall one European bank I was working with where the real turning point came when we moved away from talking about “physical risk” in the abstract and started discussing what prolonged drought could mean for agricultural loan performance and regional economic stability. That immediately changed the quality of the conversation.

And importantly, I always remind boards that scenarios are not predictions. They are tools to help organizations think through uncertainty and test resilience under different futures.

Q3. What kinds of scenario insights tend to resonate most strongly with boards?

The things that resonate most are usually the insights that challenge assumptions people did not realize they were making.

A lot of businesses implicitly assume that energy will remain available and affordable, supply chains will function normally, insurance markets will continue operating in the same way, and infrastructure will remain reliable. Scenario exercises can expose how fragile some of those assumptions may actually be.

I did a session with a leadership team where the conversation shifted dramatically once we explored second-order effects rather than direct impacts alone. Initially, they were focused mainly on their own emissions and facilities. But when we started discussing what prolonged heat stress could mean for workforce productivity, electricity reliability, transport infrastructure, and customer demand all at once, the conversation became much more strategic.

That systems perspective is often where the value really emerges. Climate change and the transition are not isolated sustainability issues. They interact with economics, geopolitics, technology, migration, infrastructure, and social stability.

Boards also engage strongly when scenarios reveal asymmetries. In some futures, firms may be far more exposed than they realized. In others, they may actually be well-positioned if they move early or adapt faster than competitors.

Q4. How do you ensure scenario exercises lead to action rather than just discussion?

One of the biggest risks is that scenarios become an interesting workshop that everyone enjoys for two hours and then never revisits.

To avoid that, I always try to tie the discussion back to concrete decisions. What changes if this future starts unfolding? What indicators should we monitor? What investments become more important? Which parts of the strategy may need stress-testing?

The strongest scenario exercises usually lead into governance, strategy, or risk management discussions. Maybe it is reviewing supplier concentration. Maybe it is stress-testing parts of the portfolio. Maybe it is identifying no-regret investments that improve resilience across multiple futures.

I worked with one insurer where the scenario discussion ultimately led to a much broader conversation around underwriting exposure, concentration risk, and the long-term viability of coverage in certain geographies. That was far more valuable than simply producing another climate report.

I also think organizations need to stop treating scenario analysis as a one-off exercise done for disclosure purposes. The external environment is changing continuously. Scenario thinking should become part of how organizations monitor strategic uncertainty over time.

Q5. What advice would you give to a sustainability professional leading their first board scenario session?

Start with the business model, not the climate model.

I think a lot of sustainability professionals feel they need to prove credibility by leading with technical detail. But in a board setting, that can sometimes create distance rather than engagement.

Start with the core strategic questions. What could disrupt this business? What assumptions are we making about markets, infrastructure, regulation, customers, or energy systems that may no longer hold true?

Then use the scenario as a structured way to explore those questions.

I would also avoid presenting scenarios with false precision. The goal is not to predict the future perfectly. No one can do that. The goal is to help organizations think more systematically about uncertainty and improve decision-making under changing conditions.

One thing I often ask boards is: “What would surprise you most in this future?” That question tends to unlock much better discussion than spending twenty minutes debating the values of specific variables in the model.

I believe that scenarios help organizations widen their field of view. They help leadership teams think more strategically and more systemically about change. In an increasingly volatile world, that is really valuable.