Aligning decarbonisation and climate adaptation for greater impact

For the real estate sector alone, cumulative projected costs of changing climate physical risk exposure could reach US$536 billion, or 26% of the total real estate asset value of the companies in the S&P Global REIT Index by 2050 under the low climate change scenario.

These are significant costs, but they can be mitigated.

Achieving synchronisation

Real estate asset owners are now better equipped than ever to assess their exposure to physical climate risks – such as droughts, wildfires, and floods – and to transition risks, which arise from the industry’s shift toward a net zero economy.

Access to accurate and comprehensive data empowers real estate asset owners to make informed decisions and develop tailored action plans based on vulnerability analyses.

Further, the effective use of this data facilitates the strategic allocation of resources to enhance resilience, meeting the growing expectations of investors and other key stakeholders, and ensuring compliance with regulatory demands.

But a successful climate resilience plan requires a cohesive and strategic approach. Asset owners need to be able to align actions across the entire piece, unifying an entire ecosystem comprising facilities managers, sustainability teams, consultants, and contractors.

Plans must ensure actions are synchronised to ensure goals are met at each stage of the transition. By integrating climate risk assessment into a unified investment plan, real estate professionals can proactively align actions and avoid conflicting priorities. For instance, improving building insulation can simultaneously reduce energy consumption and mitigate heat waves, demonstrating the synergistic benefits of a comprehensive approach.

A recent whitepaper by Deepki explores the critical steps for building a resilient portfolio, from understanding climate change’s impacts to implementing practical strategies for protecting your investments.

Data-driven decisions

Adapting to climate change makes considerable demands on capital expenditure, and to justify that spend, adaptation and resilience strategies must be based on accurate, reliable, and timely data.

By collecting comprehensive information about an asset’s vulnerability, owners can develop targeted retrofit strategies to enhance resilience. Yet the complex landscape of sustainability and climate risk data management can hinder decision-making and create cost inefficiencies.

Robust expertise across the entire value chain is essential for interpreting data effectively, conducting in-depth assessments, and ensuring climate adaptation efforts are focused on the most effective measures to maximise their impact and minimise unnecessary costs.

Technology too plays a crucial role in enabling effective climate risk management and adaptation. Real estate professionals can make data-driven decisions and implement actions to optimise their climate resilience strategies by leveraging advanced analytics tools, building performance simulation software, and IoT devices to provide valuable insights into building performance and identify areas for improvement.

Opportunities for real estate

A synchronised adaptation strategy is not just about mitigating costs and building resilience; it also presents an opportunity for innovation and growth. Climate-resilient properties are more attractive to investors and tenants, leading to higher valuations and increased rental income.

Additionally, energy efficient buildings and sustainable practices can lower operating expenses.

We are already seeing investors making strategic acquisitions of assets they can adapt and retrofit to become profitable additions to their portfolios.

Real estate professionals have no time to waste in formulating climate adaption strategies, but plans must be based on reliable data and actions and be aligned across the entire organisation.

By proactively implementing resilience strategies, owners can protect their investments, enhance their reputation, boost profitability, and contribute to a more sustainable environment.

Deepki’s sustainability platform empowers real estate professionals to navigate the complexities of climate change and seize the opportunities that lie ahead.

By Jeff Blaylock, Director of Client – UK, Deepki