Navigating the Current Uncertainty With Scenario Planning

By Jessica Butts, CEO & Boris Couteaux, Principal, ESG Global Advisors

How Scenario Analysis Can Help Shape Your Strategy – And Ours

​In today’s volatile business environment, developing an effective ESG / sustainability strategy is rarely a straightforward process. In reality, it often requires navigating both a strategic minefield and a gold mine – at the same time. Between shifting regulations, evolving and often contradicting stakeholder expectations, and political polarization, organizations are struggling to chart a clear path forward.

At our recent team strategy offsite, we used scenario analysis and planning to explore how sustainability might evolve in Canada over the next 1–3 years. The result? A lively, thought-provoking discussion guided by considering four distinct futures – each with its own risks, opportunities, and strategic implications. We’re sharing this thinking not just to spark conversation, but because we believe scenario analysis is a powerful tool for Boards and Executives in the current economic landscape.

But first, let’s talk about why this matters.

Why Scenario Planning for Sustainability?

Scenario planning is more than a thought experiment, it is a strategic tool that helps organizations anticipate change, test resilience, and make better decisions in the face of uncertainty. Sustainability issues are particularly well-suited to this approach because they are multidimensional, interconnected, and rapidly evolving.

The most well-known examples of scenario analysis are probably Pierre Wack’s Shell Scenarios, or FI’s use of stress testing, a particular type of scenario analysis that looks specifically at worst-case scenarios.

But according to the European Banking Authority, sustainability scenario analysis is becoming a core expectation for organizations, helping them assess their financial and business model resilience to climate and sustainability-related shocks, and not just for financial institutions. It is also increasingly embedded in global reporting frameworks like TCFD and ISSB, which recommend scenario analysis as a way to understand long-term risks and opportunities. Finally, it can serve as an efficient tool for Boards, aiding in strategic decision-making, separating the signal from the noise, and ensuring the company’s long-term stability.

Companies that engage in Sustainability scenario planning are better equipped to:

• Manage risk and avoid blind spots;
• Align strategy with stakeholder expectations;
• Adapt to regulatory and market shifts before they happen; 
• Surface critical factors that can influence the company’s future course;
• Drive innovation by exploring alternative futures.

Many organizations, however, lack the time and resources to do the full-blown Shell scenario analysis, but there are ways to streamline the exercise to make it fit for purpose and keeping it relevant. Of course, none of us have a crystal ball and most predictions will be wrong (some elements of all the four scenarios below are true today or will be tomorrow), but scenario planning can inform strategy and decision and help organizations move from reactive to proactive, something we believe is essential in today’s sustainability landscape.

The Four Scenarios

Here is a snapshot of the four Sustainability futures we explored using a 1-3y horizon (we think we nailed the names, but we’re biased). These are relevant to our business but of course can be applied to any sector and adapted to focus on specific issues relevant to a company (e.g., sales, supply chain, health & safety, etc.).

1. ESG Ice Age

A significant recession hits. Political backlash intensifies. Sustainability is deprioritized as companies focus on cost-cutting and survival. Disclosures become symbolic, Sustainability & ESG teams shrink, and capital flows back into traditional sectors.

Signposts: Anti-ESG rhetoric, ESG fund outflows, rollback of regulations.

2. Stuck in the Mud

No backlash, no breakthrough, just inertia. Sustainability progress stalls under the weight of complexity, fatigue, and inconsistent policies. Firms are unsure how to proceed, and innovation slows.

Signposts: Sustainability seen as a checkbox exercise, greenwashing concerns rise, investor interest wanes.

3. ‘Woke’ Capital Strikes Back

If money talks, then ‘woke’ capital may have more to say than its critics expect. Sustainability gains momentum from the ground up. Market forces, consumer demand, and investor pressure drive adoption, even in the absence of strong regulation.

Signposts: Voluntary standards gain traction, ESG becomes a talent magnet, capital rewards transparency.

4. Carney Party

A bold regulatory push, led by figures like Mark Carney, ushers in mandatory disclosures, green taxonomies, and public-private investment in sustainability.

Signposts: ISSB-aligned mandates, tax incentives, surge in Sustainability hiring and reporting.

We toyed with adding a fifth “white elephant” scenario (think global pandemic), but decided against it because the implications were too dependent on the type of disturbance.

What’s Next?

During the team discussion, we went on to discuss implications for our firm’s strategy in each scenario, identified “no-regret” moves, i.e. things we can put in place now that apply in each possible future, and will be regularly monitoring the environment to update the scenarios and adapt our strategy.

Going forward, we’re excited to bring this kind of thinking to our clients, whether through workshops, strategic planning sessions, or tailored Sustainability roadmaps. If your organization is grappling with Sustainability uncertainty, let’s talk. We can help you explore your options, identify your “no regrets” moves so you won’t have to restart from scratch later, and build a strategy that’s ready for whatever comes next.

Contact us to learn more about ESG Global Advisors, our team, and how we can help you with your approach to strategy, governance & reporting in the current market. ESG Global offers a comprehensive range of ESG services for companies and investors including customizable board education sessions. Visit Our Services to learn more.

Disclaimer: AI contributed to the creation of this article, but it was guided, reviewed and fact-checked by ESG Global’s human experts. Please note that the content and material provided in this article is for general information purposes only. It is not to be taken or relied upon as legal advice and should not be used for professional or commercial purposes. This article is intended to communicate general information about relevant sustainability matters and reporting requirements as of the indicated date. The content is subject to change based on evolving regulatory reporting requirements.