Tools and Resources for Climate Risk Preparedness in Commercial Real Estate

In commercial real estate, the increasing prevalence of climate-related hazards and extreme weather events puts millions of U.S. and Canadian properties at risk, emphasizing the importance for property stakeholders to assess and disclose physical climate risks to mitigate vulnerabilities and financial impacts. Reliable climate data is crucial for evaluating escalating risks like heavy precipitation, drought, extreme heat, fire and flood, which can affect operating expenses and business quality of life.

ERIS has compiled a list of useful resources to aid property owners, environmental professionals, developers, lenders, and investors in their efforts to manage these risks.

ASTM International’s New Guide (WK62996) for Property Resilience Assessment: Standardizing Climate Risk Assessment and Enhancing Building Performance
ASTM International is working on finalizing its New Guide for Property Resilience Assessment (WK62996). This guide aims to establish best practices for climate risk assessment and will offer a standardized framework for communicating the impact of specific hazards and vulnerabilities on buildings, as well as identifying resilience measures to enhance building performance.

Integration of ASTM Standard with Key CRE Decision-Making Standards: Aligning with E1527, E2018, and E2026 for Comprehensive Assessment
The upcoming ASTM standard will be aligned with other standards commonly used in commercial real estate (CRE) decision-making, such as the E1527 Standard Guide for Environmental Site Assessments: Phase I Environmental Site Assessment Process, E2018  Standard Guide for Property Condition Assessment: Baseline Property Condition Assessment Process, and E2026  Standard Guide for Seismic Risk Assessment of Buildings.

ERIS Originals: ASTM’s Standard Guide for Property Resilience Assessments of Buildings
ERIS met with the chair of the new ASTM task group focused on standardizing property resilience assessments to discuss the committee’s work and what the new guide means for environmental consultants.

SEC Proposal: Mandatory Climate-Related Disclosures for Publicly Traded Firms
U.S. Securities and Exchange Commission (SEC) proposed a rule change on March 21st, 2022, mandating climate-related disclosures for publicly traded firms, including specific climate metrics, information on significant climate risks, and greenhouse gas emissions data. These disclosures would be required as part of registration statements and periodic reports filed with the SEC.

Guideline B-15 from Canada’s OSFI: Strengthening Resilience of Financial Institutions to Climate Risks
Issued by Canada’s Office of the Superintendent of Financial Institutions (OSFI) in March 2023, B-15 is a new guideline directing federally regulated financial institutions on assessing, managing, and disclosing climate-related risks to enhance resiliency against both physical and transition-related hazards.

ERIS Originals: Canada’s Road to Resilience: A Look at Evolving Climate Risk Policies & Practices
The article provides an overview of climate risk assessment trends in Canada and implications for CRE transactions, market prices, and property management.

ERIS Webinar – Integrating Climate Risk Assessment with Environmental Due Diligence
The escalating threat of climate risk to property prompts real estate investors and environmental consultants to pursue data offering insights into potential hazards, as demonstrated by ERIS’ webinar in collaboration with ClimateCheck and AEI consultants, focusing on the significance of climate risk assessment in environmental due diligence. Watch the recording.

Climate resilient design guidelines
Infrastructure Canada’s Climate Lens – The Climate Lens comprises two essential components: Firstly, the greenhouse gas mitigation assessment quantifies the expected emissions reduction resulting from an infrastructure project. Secondly, the climate change resilience assessment adopts a proactive risk management strategy to anticipate, mitigate, withstand, respond to, and recover from disruptions or impacts related to climate change.

Q&A: How the Climate Data Provider Helps Real Estate Investors
ClimateCheck Q&A: How the Climate Data Provider Helps Real Estate Investors – ClimateCheck addresses the challenge of understanding the risks to properties caused by climate change by offering physical climate risk data sourced from diverse datasets, enabling investors to integrate climate risk into portfolio management.

Innovating due diligence: a  case  study about how environmental data provider ERIS uses ClimateCheck
The case study underscores the importance of integrating climate risk assessments into commercial property transactions. ERIS in collaboration with ClimateCheck enables clients to make informed decisions by evaluating hazards like heat, precipitation, and flooding on a 1-100 scale. This partnership aligns with ERIS client-centric approach and helps them stay ahead of the market by addressing emerging climate challenges and regulations, enhancing clients’ ability to mitigate risks and adapt to change.

“Containing Risk: Climate Data and Phase 1 ESAs – a Case Study of ASTs in High Flood Risk Regions”
AEI Consultants‘ analysis, using data from ERIS and ClimateCheck finds that over 20% of California sites with above-ground storage tanks (ASTs) face heightened flood risks, potentially leading to environmental contamination. Published in the EBA Journal, the study underscores the need to acknowledge climate-driven flood risks in Phase 1 ESAs, proposing significant impacts on commercial real estate practices. The paper suggests including potential flood risk as a recognized environmental condition (REC) in ESAs, anticipating far-reaching effects on risk assessment, investment decisions, and regulatory standards in the Commercial Real Estate industry. Read the case study.

INDUSTRY NEWS (Canada):

Value in a time of climate risk: How owners can adapt

Climate Adaptation and Resilience in Commercial Real Estate

Integrating Climate Risks Into Property Appraisals Helps Protect Canada’s Real Estate Market

Federal government announces funds for climate resilience research to strengthen infrastructure

A Guide To Effective Climate Governance In The Canadian Commercial Real Estate Sector

ESG and its Impact On Real Estate

Insurance industry urges investments in climate adaptation

Climate Change Is a Threat to Property Values. 4 Canadian Cities Are Ranked Among the Best Prepared.

National report reveals Canada’s disaster vulnerabilities, risk areas

INDUSTRY NEWS (U.S.):

From climate risk, to climate resilience and adaptation