15 March 2023

MIPIM 2023: Why the real estate sector needs to adapt to climate risk


By Cervest

MIPIM 2023: Why the real estate sector needs to adapt to climate risk

This week is the start of MIPIM, the biggest property market event in Cannes. During the four-day exhibition and conference, MIPIM aims to advance the transformation of the built environment. The collaborative event integrates thought leadership, discussions, problem-solving, development, and investment opportunities in order to drive action on sustainability.

Acting now – not just strategizing – on the climate crisis is vital. Climate change and its impacts are accelerating and we are seeing more extreme climate events globally. As for the real estate sector, The United Nations Framework Convention on Climate Change (UNFCCC) says that if the world does not change its current carbon emissions course, the value of real estate assets at risk will grow to USD35 trillion by 2070.

Professionals in the real estate industry know how impactful severe weather and climate events can be on their assets and portfolios. That’s why climate risk adaptation planning must be a priority, to help create and redesign a robust built environment. It has never been more crucial for leaders in the real estate sector to analyze their climate risk adaptation measures. This includes city councils, REITs, and asset managers to name but a few.

The real estate industry and climate risk

City planners, REITs, and asset managers need to be aware of their climate risk landscape and climate intelligence (CI) is the best way to screen and rate individual assets and portfolios for potential climate hazards and risks over various timelines and climate scenarios. Having access to decision-useful, science-backed, climate insights is critical. Here’s why.

Sustainable design, building, and adaptation of physical buildings and core infrastructures must be a priority – and they will be completely transformed in the future. With climate change and devastating severe weather hitting parts of the globe, it is important to screen infrastructures for climate risk. City Councils need to act fast in making our cities and towns more climate-resilient – especially our buildings, core transport networks, and utilities – making them hardy in the face of climate change.

“What we are witnessing is that the surface area of risk is expanding - with new regions, cities, countries reaching new thresholds. Our infrastructure is not built to withstand some of the forecasted changes.”

Iggy Bassi, Founder and CEO of Cervest

Screening assets for climate risk is essential for REITs – it’s a pivotal part of their role. For example, a REIT conducting pre-transaction due diligence may be reluctant to trust climate-related information provided by the asset vendor in question. Finding a third party to conduct a comprehensive climate risk assessment in an incredibly tight timeframe can be very difficult, or come at an unsustainable cost. On-demand CI enables REITs and similar companies to rapidly screen the potential acquisition for climate risk across multiple emission scenarios, time steps and climate hazards simultaneously. Having such knowledge readily accessible during negotiations establishes climate intelligence as a powerful ally to any competitive business.

Asset managers require access to the best climate intelligence for climate risk assessments, screening, and reporting. This is key for mitigating climate risks whilst increasing the value of asset investments. Asset-level CI allows asset managers to pinpoint climate risk. Using this science-backed information, they can confidently drive asset improvements, reduce risk and protect client returns.

Rating climate risk on built assets

Cervest’s science-backed climate intelligence provides asset and portfolio-level insights on climate risk, enabling informed decision-making for real estate professionals. Using this insight, real estate professionals can take targeted interventions to protect assets from climate hazards, including droughts, flooding, and wildfires. They can also quantify their transition risks and meet reporting requirements including TCFD-aligned disclosure, EU Taxonomy, and ESG Reporting.

Using Cervest’s climate intelligence we are able to harness climate science from a range of leading sources, across multiple climate scenarios and time horizons, to derive decision useful insights. We can then use these insights to stress test the operation of assets and identify potential investments that are needed to improve resilience. With that information, we can drive improvements, reduce risk, and protect client returns.”

Rhyadd Keaney-Watkins, Head of ESG at Arjun Infrastructure Partners

How real estate professionals can unlock climate resilience with EarthScan

Effective adaptation strategies are built on dynamic, decision-useful climate intelligence. For the first time, EarthScan™, Cervest’s CI product, offers a truly unified picture of climate risk, turning complex climate science into relevant, robust, and actionable insights.

Real estate leaders are using EarthScan to:

  • Discover the physical and transition risk facing their assets and make adaptation, relocation, or divestment decisions

  • Screen potential acquisitions for climate risk across multiple emission scenarios, time steps (from 1970 to 2100), and climate hazards simultaneously as part of due diligence

  • Access report-ready downloadable insights on physical and transition climate risk for use in internal and external reporting including TCFD and EU Taxonomy

  • Understand the risks facing not only their own assets but that of their essential supply chain

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