SCR Sample Questions & Answers

The scenario described is a classic 'Disorderly' transition, where climate action is significantly delayed, requiring abrupt and disruptive policies later. The 'Delayed Transition' NGFS scenario specifically models this pathway, resulting in high transition risk due to the sudden policy shock. The 'Net Zero 2050' scenario is orderly, and 'Current Policies' and 'Hot House World' fail to meet the 1.5°C outcome and are characterized by high physical risk.

Chronic risks are long-term, gradual shifts in climate patterns. The gradual rise in the mean high-tide line due to sea-level rise is a classic example of a chronic risk. In contrast, hurricanes, specific flood events, and wildfires are acute risks, which are event-driven and manifest as extreme weather events.

The SBTi Net-Zero Standard is unequivocal that companies must prioritize direct emissions reductions within their own value chains. Carbon offsets cannot be counted toward the achievement of near-term or long-term science-based targets. Their only accepted role is to neutralize the small amount of residual emissions (typically <10%) that are not feasible to eliminate once the company has met its long-term deep decarbonization target.

Effective board oversight, as recommended by the TCFD, involves embedding climate considerations into the highest levels of governance. This includes ensuring the board has the necessary expertise (competency) to challenge and guide strategy, and creating clear accountability by linking executive incentives (compensation) to the achievement of climate goals. The other options represent weak or insufficient governance.

SSPs are narratives that describe different ways society and the global economy might evolve over the century, independent of climate change. They explore variables like demographics, economic growth, governance, and technological development. These socioeconomic pathways are then combined with climate models (like Representative Concentration Pathways, RCPs) to analyze how different societal futures could influence emissions, mitigation challenges, and adaptation capacity.

Liability risks arise from parties who have suffered loss and damage from climate change seeking to recover those losses from others. Litigation against a company for contributing to or exacerbating climate impacts (like water scarcity) falls squarely under the category of liability risk, which is a sub-category of transition risks.

This describes a critical amplifying feedback loop. Climate change can increase stress on forests (e.g., through fires and drought), leading to deforestation. This nature loss, in turn, reduces the planet's ability to absorb CO2, which further exacerbates climate change. This interconnection is central to the climate-nature nexus.

This is the most comprehensive strategy. It uses a leading framework (TNFD) to understand dependencies (the root cause of the risk), sets meaningful targets (context-based), takes proactive mitigation steps (watershed restoration), and addresses reputational risk through transparency (disclosure). This integrated approach tackles both the physical and reputational dimensions of the problem as required by the board.

Double materiality requires assessing two perspectives simultaneously. The first is 'financial materiality' (an 'outside-in' view), which considers how sustainability issues affect the company's financial performance and enterprise value. The second is 'impact materiality' (an 'inside-out' view), which considers the company's actual and potential impacts on people and the environment. A topic is material and must be reported if it is material from either or both perspectives.

For professional services firms, whose primary product is the expertise of their employees, Scope 1 and 2 emissions are typically low. The most significant source of emissions is often from employees traveling to meet clients. Therefore, Scope 3, Category 6 (Business travel) is usually the largest component of their carbon footprint. While other categories exist, they are generally much smaller in magnitude for this type of business.