Science‐based analysis for climate action: how <scp>HSBC</scp> Bank uses the <scp>En‐ROADS</scp> climate policy simulation

Unofficial AI-generated summary based on the public title and abstract. Not an official translation.

🔬研究者:Provides a case study of system dynamics simulation applied to corporate climate strategy, useful for understanding organizational learning and climate risk perception.

🏢実務担当者:Offers a concrete method (En-ROADS workshops) to improve employee climate literacy and support sustainability strategy implementation.

🏛政策担当者:Illustrates how interactive tools can complement regulatory disclosure requirements by fostering deeper understanding of transition risks.

In 2018, the Intergovernmental Panel on Climate Change (IPCC, 2018) found that rapid decarbonization and net negative greenhouse gas (GHG) emissions by mid-century are required to “hold the increase in global average temperature to well below 2 °C above pre-industrial levels and pursue efforts to limit the temperature increase to 1.5 °C,” as stipulated by the Paris Agreement (UNFCCC, 2015, p. 2). Meeting these goals reduces physical climate-related risks from, for example, sea-level rise, ocean acidification, extreme weather, water shortages, declining crop yields, and other impacts.ii Physical risk includes the effects of severe climate-change-related weather events that can be either acute (e.g. damage to physical infrastructure from a storm) or chronic (e.g. reduced agricultural yield due to ongoing droughts). These impacts threaten our economy, security, health, and lives.iiii Recent studies that seek to quantify climate value at risk—“the size of loss on a portfolio of assets over a given time horizon, at given probability” (Dietz et al., 2016, p. 676)—include Bos and Gupta (2019), Dietz et al. (2016), Goldstein et al. (2019), McKinsey Global Institute (2020), Sen and von Schickfus (2020), and The Economist Intelligence Institute (2015). For example, Dietz et al.'s, 2016 study estimates a climate value at risk of global financial assets of US$2.5 trillion under a business-as-usual scenario. McKinsey's 2020 study, which assesses risks for certain regions, estimates that the average number of lost daylight working hours in India from increased temperatures could increase to the point where between 2.5 and 4.5 percent of GDP is at risk. At the same time, policies to mitigate these harms by rapidly reducing GHG emissions can create transition risks for businesses—for example, stranded assets and loss of market value for fossil fuel producers and firms dependent on fossil energy (Carney, 2019). Rapid decarbonization requires an unprecedented energy transition (IEA, 2021a) driven by and affecting economic players including businesses, asset managers, and investors in all sectors and all countries (Kriegler et al., 2014). However, GHG emissions are not falling rapidly enough to meet the goals of the Paris Agreement (Holz et al., 2018). The UNFCCC, 2021 found that the emissions reductions pledged by all nations as of early 2021 “fall far short of what is required, demonstrating the need for Parties to further strengthen their mitigation commitments under the Paris Agreement” (2021, p. 5). Businesses are faring no better. Despite high-profile calls to action from influential firms such as BlackRock (Fink, 2018, 2021), corporate action to meet climate goals has thus far fallen short (e.g. the Right, 2019 analysis of the German DAX 30 companies' emissions targets by NGO “right.”). Instead of implementing climate strategies that might mitigate the risks, managers are often caught up in “firefighting” and capability traps that erode the resources needed for ambitious climate action (Sterman, 2015). Firms may also exaggerate environmental accomplishments, leading to greenwashing (Lyon and Maxwell, 2011); implement policies that are vague, rely on unproven offsets, or are not climate neutral (e.g. Sterman et al., 2018); or simply take no action at all (Delmas and Burbano, 2011; Sterman, 2015). Adding to the confusion are difficulties evaluating the effectiveness of different climate policies. Misperceptions include wait-and-see approaches (Dutt and Gonzalez, 2012; Sterman, 2008), underestimating time delays and ignoring the unintended consequences of policies (Sterman, 2008), and beliefs in “silver bullet” solutions (Gilbert, 2009; Kriegler et al., 2013; Shackley and Dütschke, 2012). These beliefs arise in part because the climate–energy system is a high-dimensional dynamic system characterized by long time delays, multiple feedback loops, and nonlinearities (Sterman, 2011), while even simple systems are difficult for people to understand (Booth Sweeney and Sterman, 2000; Cronin et al., 2009; Kapmeier et al., 2017). Although senior executives might receive briefings on climate change, simply providing more information does not necessarily lead to more effective action (Pearce et al., 2015; Sterman, 2011). Alternatively, interactive approaches to learning about climate change and policies to mitigate it can trigger climate action (Creutzig and Kapmeier, 2020). Decision-makers require tools and methods grounded in science that enable them to learn for themselves how a low-carbon economy can be achieved and how climate policies condition physical and transition risks. The system dynamics climate–energy simulation En-ROADS (Energy-Rapid Overview and Decision Support; Jones et al., 2019b), codeveloped by the climate think-tank Climate Interactive and the MIT Sloan Sustainability Initiative, provides such a tool. Here we show how En-ROADS helps HSBC Bank U.S.A., the American subsidiary of U.K.-based multinational financial services company HSBC Holdings plc, focus its global sustainability strategy on activities with higher impact and relevance, communicate and implement the strategy, understand transition risks, and better align the strategy with global climate goals. We show how the versatility and interactivity of En-ROADS increases its reach throughout the organization. Finally, we discuss challenges and lessons learned that may be helpful to other organizations. En-ROADS is grounded in state-of-the-art climate and energy science and is fully documented and freely available via Climate Interactive's (2021a) website. It is calibrated against historical data (e.g. BP, 2019; IEA, 2021a; IRENA, 2020; Lazard, 2020) and to future scenarios generated by large climate models, including the Integrated Assessment Models (Calvin et al., 2017; Fricko et al., 2017; Fujimori et al., 2017; Kriegler et al., 2017; van Vuuren et al., 2017). Since its launch in December 2019, more than 81,000 people in 86 nations have participated in interactive briefings or role-play simulations using En-ROADS, including over 1000 business leaders (including C-suite executives and investor groups), more than 150 elected officials (including senators, governors, and state legislators) and 200 congressional staff members in the United States, and dozens of leaders at nonprofits and foundations around the world (as of November 2021). Its interactive design enables En-ROADS users to explore a wide range of assumptions, policies, and actions as they create their own scenarios (Figure 1). En-ROADS can be used in multiple modes, including the Climate Action Simulation (Rooney-Varga et al., 2020), a role-playing game in which participants take the roles of global stakeholders at a mock UN climate summit and negotiate agreements to mitigate climate change, and the En-ROADS Climate Workshop (Jones et al., 2018), an interactive group learning experience. Both are well-suited for use in companies. HSBC supports the objectives of the Paris Agreement (UNFCCC, 2015) and is committed to the transition to a low-carbon economy through its climate change and sustainable financing strategy (HSBC, 2020a, 2020b). To deliver its commitments, the bank's corporate-sustainability function uses a variety of tools and methods, among which En-ROADS has a central position. In the following, we show how HSBC uses En-ROADS to improve employee understanding of the risks of climate change, particularly transition risks, and catalyze action at senior levels. En-ROADS stimulates dialogue on sustainability and fosters collaboration on climate change with partners and across industries. To date, more than 2600 HSBC employees across different organizational levels and regions have experienced En-ROADS, with more than 300 in En-ROADS workshops and over 2300 as part of a risk-management training. En-ROADS Climate Workshops at HSBC run for approximately 1 hour. Workshops begin with a brief grounding in climate science and risks and a demonstration of the model before moving into interactive exploration using En-ROADS. Employees relate HSBC's climate commitments to levers in En-ROADS and mentally simulate and express their thoughts about the possible effect on climate change if the bank's commitments were achieved at global scale. A facilitator then runs the model, exploring the results together with the group. The workshop closes with a debrief in which participants discuss their insights and share their reactions and feelings, which evaluative research has found to be an important contributor to its impact (Rooney-Varga et al., 2018). Post-workshop evaluations show that participants feel more confident in their ability to “speak climate,” better understand HSBC's sustainability commitments, and are more energized and inspired to take climate action. Interactive exploration through En-ROADS enables people to develop their own scenarios and reflect on the implications and impacts of different policies, stimulating their thinking about HSBC's and their own role in solutions. Because En-ROADS is transparent and grounded in the latest scientific research, the debate and discussion around corporate action are strengthened. These outcomes arise through the collaborative learning process that En-ROADS fosters. Facilitators “hand over” En-ROADS to the participants so they can learn together with colleagues across the organization, enabling them to debate and challenge their assumptions about climate change. Since engagement with En-ROADS began in May 2018, originally with a development version, more than 300 HSBC employees at different organizational levels and functions within HSBC in the United States, the United Arab Emirates, France, and Germany have participated in 30 intensive En-ROADS workshops. These workshops help elevate the priority of sustainability work within these areas, particularly at senior levels. Bespoke En-ROADS sessions held with members of the C-suite and their direct reports help

• openalex https://doi.org/10.1002/sdr.1697first seen 2026-08-02 18:00:51