Category: Climate insurance · Reviewed by Simon Temme, Account Executive · Last reviewed 2026-06-10
The Network for Greening the Financial System (NGFS) is a coalition of central banks and supervisors that develops and publishes reference climate scenarios used by financial regulators and firms worldwide. Founded on 12 December 2017 at the One Planet Summit in Paris by eight central banks, the network now counts more than 130 members, including the Bank of England as a founding member.
Category: Climate insurance Also known as: NGFS; Network for Greening the Financial System; NGFS scenarios Established / Date: 12 December 2017, One Planet Summit, Paris Related concepts: Climate stress test insurance, Bank of England climate stress test, Climate VaR
The NGFS is a voluntary, member-led network established to enhance the role of the financial system in managing risks and mobilising capital for the transition to a sustainable economy. Its principal output of interest to insurers is the NGFS Climate Scenarios — a suite of long-term pathways describing physical and transition risk under different policy, technology and behavioural assumptions.
The Phase I scenarios were first published in June 2020. Subsequent phases have refined assumptions, sectoral granularity and physical risk overlay: Phase II (June 2021), Phase III (September 2022), Phase IV (November 2023). The current scenario set includes Net Zero 2050, Below 2°C, Delayed Transition, Fragmented World, Nationally Determined Contributions (NDCs) and Current Policies.
Each scenario provides macro variables (GDP, inflation, interest rates), sectoral pathways (energy mix, emissions, carbon prices) and physical hazard projections, sourced from integrated assessment models (REMIND-MAgPIE, GCAM, MESSAGEix-GLOBIOM) and downscaled climate models.
The NGFS is not a regulator; it has no rule-making power. Its scenarios, however, are widely adopted by national authorities. The PRA’s SS 3/19 implicitly endorses NGFS scenarios as a credible reference; the Bank of England CBES (2021-22) adopted NGFS-aligned pathways for the Early Action, Late Action and No Additional Action variants.[1]
The European Central Bank, Banque de France, BaFin, the People’s Bank of China and many others also use NGFS scenarios for supervisory stress testing. The Hong Kong Monetary Authority, Monetary Authority of Singapore and Federal Reserve have referenced NGFS in their own climate exercises.[2]
NGFS scenarios are openly available via the NGFS Scenario Portal, and the network publishes technical documentation, presentations and methodological updates.
UK insurers, Lloyd’s managing agents and asset managers use NGFS scenarios for three purposes. First, as primary inputs to PRA SS 3/19 scenario analysis and ORSA reporting. Second, as the underlying reference for Climate VaR and portfolio-level climate metric calculations. Third, as the macro frame against which underwriting books are projected for catastrophe modelling overlay.
Major reinsurers (Swiss Re, Munich Re, Lloyd’s) and brokers (Aon, Marsh, WTW, Gallagher) publish methodologies showing how NGFS pathways are integrated into stochastic catastrophe modelling. The London Market generally uses NGFS Net Zero 2050 as the “orderly” benchmark, Delayed Transition as the “disorderly transition” reference, and Current Policies or Nationally Determined Contributions as “hot-house world” physical-risk-dominated comparators.
The TCFD’s 2021 Guidance on Metrics, Targets and Transition Plans references NGFS scenarios as appropriate reference points; IFRS S2 requires disclosure of the scenarios used and refers readers to the NGFS suite as a publicly available option.[3]
UK businesses do not directly engage with the NGFS, but they will encounter NGFS scenarios in three contexts. First, in their own strategic report climate disclosures under s.414CB Companies Act 2006, where NGFS pathways are often used as the reference scenario set.[4] Second, in insurer due diligence questionnaires at renewal, particularly for D&O and large property programmes. Third, in pension and bank counterparty disclosures.
Boards should ensure that any internal scenario analysis is mapped clearly to the NGFS pathway used, with documented rationale for the choice and any local UK adjustments. This consistency materially eases insurance broking conversations.
An AIM-listed UK chemical manufacturer uses NGFS Net Zero 2050 as its primary transition scenario and NGFS Current Policies as the physical-risk comparator, with UKCP18 downscaling for site-level flood exposure. The strategic report disclosure under s.414CB references both, the D&O insurer accepts the rationale, and the company’s Climate VaR figure of -2.1% under Delayed Transition feeds into the captive’s parametric layer design.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-10. Next review: 2026-12-10.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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