A growing number of real estate professionals and environmental consultants are seeking to assess properties for climate risk. ClimateCheck and our partner ERIS, an environmental data company, and SLR Consulting, an environmental consulting company, hosted a webinar about integrating climate risk assessments with environmental due diligence.
Understanding physical climate risk on a regional and property-specific level is a first step in knowing how to mitigate the impact of current climate hazards and informing future investment strategies overall.
The panel discussed why more firms are seeking physical climate risk data, the ways environmental due diligence experts use this data, and how climate data can be woven into existing consulting practices.
Joelle Doubrough, Senior Environmental Planner for SLR Consulting, said ClimateCheck’s analysis has saved her firm time on what would otherwise be a labor-intensive process obtaining and analyzing climate risk data.
“ClimateCheck reports help us understand the exposure and likelihood of climate-related hazards,” Doubrough said.
Here are some highlights from the webinar.
Factors and regulations driving adoption of climate risk assessments in Canada
Canada, like the United States, is seeing a growing appetite for climate risk assessments. There are a few factors driving this increase, ClimateCheck Principal Cal Inman said during the webinar. The reality of climate change is difficult to ignore, and best practices in the real estate industry are shifting to include consideration of physical climate hazards such as wildfires, floods and high-wind events.
From an ESG standpoint, companies are looking to incorporate climate risk assessments into their overall sustainability practices. More and more, there is a big focus on using resilience strategies in asset management planning, Inman said.
A few different regulatory factors in Canada are also pulling stakeholders, environmental consultants and investors towards climate risk assessments. The environmental assessment processes are changing, with companies evaluating both the effects of projects on the environment (such as greenhouse gas emissions) and the effects of climate hazards on projects, said Doubrough.
Municipalities in Canada are incorporating climate into their action planning, and are considering climate hazards when reviewing development applications, which can play a role in zoning as well. For instance, as flood risk data in Canada has evolved, municipalities have updated their flood zones to reflect the data.
The Canadian government also has programs to help fund climate resilience and mitigation, including Investing in Canada Infrastructure Program (ICIP) and Disaster Mitigation and Adaptation Fund (DMAF). Some government programs require climate risk assessments as a condition of receiving funds, said Doubrough.
In the private sector, climate risk disclosure is growing as businesses consider climate hazards and the associated transition risks. The Task Force on Climate-related Financial Disclosures (TCFD), which was created to improve disclosure of climate-related financial information, provides businesses with voluntary guidelines for disclosure.
“I think Canada is taking leaps and bounds in that space and catching up to the U.S. quickly,” Doubrough said.
Canada’s Office of the Superintendent of Financial Institutions also recently issued Guideline B-15, which directs federally-regulated financial institutions on how to manage and disclose climate-related risks. Some financial institutions are expected to implement these guidelines as early as 2024.
Using climate risk data to enhance due diligence processes
ClimateCheck’s analyses look at current climate risk and risk in the future, based on projected climate models. The company’s team of experts uses data from government, academic and other public and institutional sources, such as the Intergovernmental Panel on Climate Change (IPCC) to rank drought, heat, fire, flood, and storm risk. We provide a 1-100 rating that represents relative risk to a specific property. In addition, we analyze overall risk for entire portfolios.
Our services simplify due diligence processes for real estate stakeholders. Environmental consultants use our data as a first step in understanding the risks to client property. They may prioritize on-site assessments and mitigation efforts for properties showing higher risk.
Many consulting companies lack the resources to conduct climate risk analysis. ClimateCheck streamlines the process by providing a data-driven picture of risk at multiple levels. Environmental consultants then incorporate ClimateCheck analysis to help investors, lenders and other real estate professionals make more informed decisions.
Watch the webinar to learn more about using climate risk data to protect your investments. To learn more about how ClimateCheck can empower your firm to take control of risk, contact us.
ClimateCheck empowers property buyers, owners, and brokers by revealing and quantifying climate-related risks through our proprietary risk assessments and reports. Our team of experts tap data from government, academic and other public and institutional sources, such as the Intergovernmental Panel on Climate Change, to assess assets for drought, heat, fire, flood and storm risk. Clients of ClimateCheck include ERIS, AEI Consultants, Morningstar Inc., Green Street, and Black Knight.