A blindfolded woman and man flying through a turbulent blue sky. Credit: Midjourney V8 @ paulandcat.

Strategy

Flying blind: Scenario planning in a climate-disrupted world

Published November 11, 2026 in Strategy • 11 min read

Business leaders are imagining possible futures without confronting the real risk of systems breakdown, argue Thomas Gauthier and Andrew Hoffman.

Rapid read:

  • Corporate scenarios often assume that institutions and markets will remain functional, even under severe climate disruption.
  • Climate change can undermine the insurance, water, food, and governance systems businesses depend on.
  • Leaders should evaluate scenarios collectively for institutional coverage, including breakdowns and fundamental changes in societal values and authority.

Scenario planning helps managers navigate uncertainty. From energy transitions and geopolitical fragmentation to AI, managers rely on scenarios to spot early warning signals in the market, explore futures, anticipate possible outcomes, and stress-test strategic choices such as launching a product, entering a market, or making an acquisition.  

Yet despite the growing use and sophistication of scenario planning in business, a paradox is emerging. Organizations are becoming better than ever at developing scenarios, but increasingly blind to futures shaped by discontinuities arising from ecological disruption. As commonly practiced, scenario planning is better suited to preparing for change within a familiar world than anticipating transformations of the world itself.  

Though climate risks are acknowledged, scenarios continue to rest on largely unquestioned assumptions about the natural, political, social, and economic worlds. In its current form, scenario planning under-imagines the kinds of discontinuous conditions that may emerge. These limitations are not primarily procedural or managerial. They are conceptual, and this must change.

A city before and after flooding. Farmland before and after drought

What corporate scenarios typically vary and what they stabilize 

Most contemporary corporate scenarios excel at exploring variations in technologies, economic trajectories, and geopolitical configurations. They ask how energy systems might evolve, how growth or volatility might unfold, or how global cooperation might fragment or realign. 

What is striking, however, is how much remains constant and known across these imagined futures: environmental conditions remain stable; states retain basic governance capacity; markets continue to coordinate economic activity; contracts, supply chains, and regulatory enforcement mostly hold; and social consent and legitimacy are strained but manageable. 

Environmental change may be mapped as severe, but ultimately governable. In other words, scenarios tend to imagine disruption within institutions that are assumed to be stable rather than disruption of the institutions themselves. This is not a flaw of any single scenario set. It is a structural feature of how scenario planning is typically framed and evaluated. The problem is that environmental change is already disrupting those institutions in ways that conventional scenario exercises often fail to capture.

Scenarios tend to imagine disruption within institutions that are assumed to be stable.

From climate change to systems breakdown 

The science of climate change is well established. The planetary boundaries framework identifies 350 ppm (parts per million) as a threshold for atmospheric CO2 associated with a stable climate. Human activities had pushed the global average concentration to approximately 417 ppm by 2022. In 2025, global temperatures averaged approximately 1.4°C above pre-industrial levels. This temperature rise is causing more frequent and intense natural disasters such as wildfires, droughts, and hurricanes, along with sea-level rise, disease spread, and species extinction.  

Scientists warn that unless greenhouse gas emissions decline rapidly this decade, damage to the global climate will be irreversible. If global warming reaches 3°C (5.4°F), risks of crossing irreversible “tipping points” increase dramatically. Current policies put the world on a trajectory toward approximately 2.8°C (5°F) of warming by the end of the century, with substantially greater increases possible under high-emissions scenarios. At higher levels of warming, many human and natural systems will face increasingly severe limits to adaptation. Extreme heat already poses serious threats to human health in some regions. In 2016, India recorded its highest temperature of 51°C (124°F), and in 2023, China recorded its highest temperature of 52.2°C (126°F). Such extreme temperatures are “testing the limits of human survivability,” particularly when combined with high humidity and prolonged exposure.  

Some estimates suggest that the potential global economic damage from climate change could reach a discounted present value of $22.5tn by 2100 in lost labor productivity, declining crop yields, food shortages, early deaths, property damage, infrastructure breakdowns, water shortages, air pollution, flooding, and fires. The Bank for International Settlements, an umbrella organization for the world’s central banks, warned in 2020 that climate change could be one of the largest economic dislocations in history.  

Beyond direct economic costs, climate change will displace millions of people around the world, straining the supply of humanitarian aid and causing mass climate migration that will impact national borders. In 2023, UNICEF reported 43.1 million internal displacements of children caused by weather-related disasters between 2016 and 2021, primarily floods and storms.  

These statistics make clear that climate change is not, in its truest sense, an environmental issue; it is a systems breakdown. And it is just one of nine markers – called “planetary boundaries” – of the Anthropocene, a term describing the profound influence of human activity on the functioning of Earth’s ecosystems. At the latest count, seven of the nine planetary boundaries have been crossed: climate change, biosphere integrity, land-system change, freshwater change, biogeochemical flows, novel entities, and ocean acidification. 

These breached boundaries disrupt social, political, and economic systems, making scenario planning increasingly difficult and less reliable. In what some scholars call Anthropocene society, human institutions, political authority, and natural systems are deeply entangled, with disruptions in one domain spilling into others. This challenges foundational assumptions about how societies are governed, which actors are seen as legitimate, how conflicts over responsibility and sacrifice are resolved, and how human systems interact with biophysical limits. In turn, this challenges the basis of scenario planning. 

Research on possible archetypal scenarios for Anthropocene societies lays out a range of futures. At one end of the spectrum, “collapsing systems” describes a future of institutional fragmentation in which cascading failures dominate and we, as a species, are unable to adapt. At the other end, “cultural re-enlightenment” describes a world where societies undergo deep normative and institutional reordering, redefining values, authority, and human-nature relations to live in balance with nature.  

Two related scenarios lie in between. “Market rules” describes arrangements in which the logic of the market remains the primary mechanism for addressing ecological disruption, leading to the belief that business enterprise can rise to the challenge. In the “technology fix” scenario, societies rely on technological, scientific, and engineering solutions to address the challenges. These scenarios are not forecasts. They are institutional-political archetypes, ways that societies might organize themselves under planetary stress. By isolating these possible archetypes, scenario planning can be adapted to better anticipate disruption. 

A reservoir with high and low water levels. An intact road and a road damaged by ground collapse.
A reservoir with high and low water levels. An intact road and a road damaged by ground collapse

Institutional blind spots and why they matter 

When archetypal scenarios for Anthropocene societies are used to assess corporate scenario portfolios, a pattern emerges. Corporate scenario portfolios frequently privilege market rules and technology fix futures in which ecological disruption is addressed primarily through pricing mechanisms and technological innovation. Even scenarios that gesture toward turbulence or fragmentation often stop short of imagining full institutional breakdown or deep normative transformation.  

Scenarios resembling collapsing systems, in which governance fails and legitimacy erodes, are typically treated as implausible extremes and excluded. Scenarios akin to cultural re-enlightenment, where societies fundamentally rethink values, authority, and human-nature relations, are often framed as aspirational narratives rather than as concrete strategic environments. 

The result is a narrowed imagination. Scenario sets may appear diverse, yet they systematically under-sample the institutional configurations most consequential under Anthropocene conditions. Rather than informing substantive strategic change, scenario planning can become a box-ticking or disclosure-driven exercise that relies on “known knowns.” This matters because strategy is shaped not only by the futures analyzed, but by those deemed thinkable in the first place. Blind spots emerge when important possibilities are systematically overlooked. Some of the background conditions that corporate scenarios routinely take for granted are already becoming less reliable in key domains. 

  • Insurance: Climate change is fueling more severe weather, and insurers are responding to rising damage claims from once-rare events that are becoming increasingly common. As a result, the most important backstop for corporate risk management is becoming uncertain. Property insurance premiums in the US have climbed 46% between 2021 and 2026, nearly triple the rate of inflation. Not only are premiums going up, but coverage is also shrinking. Insurers have reduced or dropped coverage for some items, increased deductibles for other risks, or withdrawn from markets – canceling policies or refusing to write new ones when risks become too uncertain. In recent years, major insurers, including State Farm and Allstate in California and several providers in Florida, have restricted new policies, reduced coverage, or withdrawn from selected segments of the property insurance market. The constraint on available insurance is rippling through the economy.  
  • Freshwater availability: Climate change is a key driver of the loss and degradation of freshwater ecosystems. Climate change is also affecting water quality, as higher water temperatures and more frequent floods and droughts are projected to worsen pollution, from sediment to pathogens and pesticides. As freshwater becomes scarcer or less reliable, industrial facilities may struggle to secure the water they need to run production processes, cool equipment, maintain basic sanitation, or generate electricity. In August 2026, 13 nuclear reactors in France were affected by environmental disruptions, including extreme heat, drought, and jellyfish blooms, while Serbian hydroelectric plants operated at only 20% to 30% capacity. The World Meteorological Organization warns that climate change, more extreme weather, and water stress will undermine our energy security and even jeopardize renewable energy supplies.  
  • Food availability: A 2025 study estimates that global production of six staple crops could decline by approximately 4.4% for every 1°C of global warming, even after accounting for agricultural adaptation. Rising temperatures are creating more favorable conditions for the spread of pathogens and mycotoxins, posing risks to human health and increasing food waste and loss. Separately, historical soil erosion has already removed the organic-rich topsoil horizon from an estimated 35% of cultivated land in the US Corn Belt, further undermining agricultural resilience.  

These examples do not mean that familiar systems are disappearing. However, conditions that businesses once treated as reliable background assumptions, including insurability, access to water and energy, and dependable food supply, increasingly need to become variables in the scenarios themselves.

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Anthropocentrism and the illusion of governability 

Central to these blind spots is the extent to which scenarios treat natural systems as reliable and predictable. In many scenario exercises, environmental change appears as an external stressor, something to be managed, adapted to, or mitigated. Rarely is it modeled as a force that destabilizes institutions, reshapes political authority, undermines legitimacy, or produces irreversible thresholds. 

In the climate-changed world of the Anthropocene, nature is no longer stable, predictable, or reliable. Equally important, it is no longer external to social systems, but internal and interconnected with them. Nonlinear ecological dynamics interact with political and institutional dynamics in unpredictable ways. Treating environmental change as an ultimately manageable risk reinforces an illusion of control, allowing scenarios to remain internally coherent at the cost of strategic realism. Even well-designed, well-used scenarios can fall short if they stabilize assumptions about institutional continuity and environmental governability. 

Treating environmental change as an ultimately manageable risk reinforces an illusion of control.

Institutional coverage: rethinking how scenarios are evaluated 

One reason blind spots persist lies in how scenarios are judged. Scenario planning traditionally privileges plausibility. Scenarios are expected to be internally consistent, credible to decision-makers, and grounded in observable trends. While plausibility is important, it is not neutral. Dominant values, biases, heuristics, prevailing power structures, and widely shared assumptions about how societies function shape what appears plausible. We therefore propose an additional criterion for assessing scenario portfolios: what we term “institutional coverage.” Rather than asking only whether each scenario is plausible, managers should assess the breadth and diversity of institutional configurations represented across the scenario portfolio, including those that challenge prevailing assumptions about governance, markets, and societal values.

Unknown futures: climate risks are acknowledged but the challenges of the worst-case scenarios are routinely discounted

Five key questions for evaluating scenarios 

  1. Scientific realism: Does the scenario set include scientifically plausible ecological tipping points and cascading disruptions?  
  2. Structural impact: Is socio-ecological disruption treated as a force that reshapes institutions and markets, rather than merely as a risk to be managed?  
  3. Governance diversity: Does the scenario set span fundamentally different modes of governance, rather than assuming continuity of state capacity and coordination? 
  4. Institutional range: Does the scenario set include futures marked by institutional breakdown, market failure, and deep normative reordering, rather than clustering around incremental variations of the present?  
  5. Institutional foundations of markets: Are authority and coordination across market institutions treated as variables open to change and contestation, rather than fixed background conditions? 

Adding this criterion does not mean abandoning plausibility. It means complementing it with explicit attention to what kinds of societies are being imagined and which are systematically excluded. For leaders using scenario planning, this reframing has five concrete implications for how scenario work is designed, interpreted, and used. 

Make institutions explicit. Governance capacity, legitimacy regimes, and dominant institutional logics should be treated as core scenario dimensions, not implicit background assumptions. Scenarios should specify not only what happens, but who governs, on what basis, and with what authority. 

Include institutional discontinuity. At least one scenario should explore conditions under which coordination fails or fragments. Another should examine futures in which norms, values, and authority are profoundly reconfigured. These are not extreme edge cases in the Anthropocene, but plausible societal trajectories. 

Integrate socio-ecological thresholds. Environmental change should be modeled as a force that reshapes political and institutional domains, altering legitimacy, trust, and power relations, not merely as an operational or financial risk to be managed.  

Evaluate scenario portfolios rather than individual scenarios. The question is not whether each scenario appears individually plausible and internally coherent, but whether the portfolio exposes leaders to genuinely different institutional and socio-ecological futures.  

Link scenarios to governance, not just strategy. Scenario insights should inform board-level discussions about responsibility, authority, and long-term legitimacy, rather than remaining confined to risk management or strategic monitoring dashboards. 

Used this way, scenario planning becomes not just a tool for anticipating change, but a way to confront the institutional assumptions that shape how organizations respond to a rapidly transforming world.

Expanding strategic imagination  

Scenario planning remains a powerful strategic tool. But in the Anthropocene, its value depends on what it enables organizations to imagine. By examining how different societies and markets might be organized under extreme planetary stress, managers can move beyond scenarios that assume continuity and control.  

The challenge is not to predict “collapsing systems” or to engineer “cultural re-enlightenment,” but to ensure that strategic imagination is commensurate with the environmental, political, economic, and social transformations already underway. What organizations prepare for reflects what they believe is possible. In an era of planetary disruption, expanding the scope of those beliefs may be the most strategic act of all.

Authors

Thomas Gauthier

Thomas Gauthier

Professor of Strategy and Founding Director of the Alternative Futures Institute at Emlyon Business School

Thomas Gauthier is Professor of Strategy and Founding Director of the Alternative Futures Institute at Emlyon Business School. He previously served as Associate Dean for Pedagogy in the Anthropocene.

Andrew Hoffman-2

Andrew J. Hoffman

Holcim (US) Professor of Sustainable Enterprise at the University of Michigan

Andrew J. Hoffman is the Holcim (US) Professor at the University of Michigan’s Ross School of Business. His work has been covered in The New York Times, Scientific American, Time, Wall Street Journal, Atlantic, and National Public Radio. He has published six previous books with Stanford University Press, including How Culture Shapes the Climate Change Debate (2015) and, most recently, Management as a Calling (2021).

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