Climate change and cities: adapting real estate investment decisions
Blending physical risk modelling with social, financial and regulatory information will be the difference between prepared real estate investors, and those failing to adapt to climate threats.
It is becoming increasingly clear that some of the predicted impacts of climate change are now inevitable.
To date, global discussions and efforts have primarily focussed on climate mitigation and carbon emissions reduction. However, the need for rapid, considered, and collaborative efforts to appropriately assess and adapt to the impacts of a changing climate are also pressing.
Existing government and private sector commitments to greenhouse gas (GHG) emission reduction will not put the world on track to meet the essential target of keeping global temperature rise to below 1.5C. This is despite the pledges and efforts already made across sectors - such as across large parts of the real estate market – to achieve net zero carbon by 2050 or sooner.
In fact, the latest predictions are that without rapid, large-scale change to systems and infrastructure, we could see a temperature rise of 2.8°C or greater by the end of the century. This poses a serious challenge for investors and asset owners, as the risks of losses and damages from climate change compound with every increment of global warming.
A new report by Schroders Capital’s real estate team looks at the complexities of modelling and understanding the risks posed by climate change to cities and real assets. Building resilience is a multi-faceted challenge.
Ultimately, we believe that blending physical risk modelling with social, financial and regulatory information will be the difference between prepared real estate investors, and those failing to adapt to the inevitable threats of climate change.
To read the full report, click the download button.
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The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes only and it is not intended as promotional material in any respect.