Recommendations for a More Practical Standardized Climate Scenario Exercise

The Canadian Climate Institute supports the Office of the Superintendent of Financial Institutions' (OSFI) draft Standardized Climate Scenario Exercise (SCSE) but argues it is currently oversimplified. The Institute recommends that OSFI explicitly disclose limitations regarding the lack of regional data and the omission of clean energy opportunities. It specifically warns that the SCSE confuses 'exposure' with 'risk' in its physical and real estate modules, failing to account for asset vulnerability and comprehensive climate policy. To increase practical value, the Institute suggests piloting risk assessments for a small number of highly material risks, such as flooding, rather than broad hazard exposure mapping.

• The SCSE focuses exclusively on transition risk and does not analyze the potential opportunities arising from the clean energy transition, which could lead to an exaggeration of anticipated financial harm.
• The SCSE lacks subnational or local level analysis, failing to account for regional differences across Canada, such as the clean electricity advantages held by British Columbia, Manitoba, and Quebec.
• The SCSE's physical module identifies physical exposure to hazards but does not assess actual physical risk, as it ignores the physical vulnerability of assets to those hazards.
• Current physical hazard data, including that from Climate Data Canada, is insufficient for assessing exposure to wildfires and flooding, making the translation of IPCC Representative Carbon Pathways into localized data a significant challenge.
• The Institute recommends that OSFI shift from broad hazard exposure assessments to piloting a risk assessment approach focused on a small number of highly material risks, such as flooding, incorporating specific asset characteristics.
• The real estate module's reliance on power sources and emissions intensities reflects exposure rather than transition risk; it should instead incorporate broader climate policies, such as energy efficiency standards and carbon pricing rebates.
• The SCSE's baseline current policy scenario may underestimate harm to Canada's competitiveness by assuming no new climate policies, ignoring the evolution of global technology and consumer preferences.

APA

Canadian Climate Institute (2023). Recommendations for a More Practical Standardized Climate Scenario Exercise. https://climateinstitute.ca/publications/recommendations-for-a-more-practical-standardized-climate-scenario-exercise/

Chicago

Canadian Climate Institute. Recommendations for a More Practical Standardized Climate Scenario Exercise. 2023. https://climateinstitute.ca/publications/recommendations-for-a-more-practical-standardized-climate-scenario-exercise/.

Wikipedia

{{cite press release |author=Canadian Climate Institute |title=Recommendations for a More Practical Standardized Climate Scenario Exercise |date=21 December 2023 |url=https://climateinstitute.ca/publications/recommendations-for-a-more-practical-standardized-climate-scenario-exercise/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{canadianclimateinstitute2023recommendations, author = {{Canadian Climate Institute}}, title = {{Recommendations for a More Practical Standardized Climate Scenario Exercise}}, publisher = {Canadian Climate Institute}, year = {2023}, month = dec, url = {https://climateinstitute.ca/publications/recommendations-for-a-more-practical-standardized-climate-scenario-exercise/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }