Sustainable Real Estate Investment Implementing The Paris Climate Agreement An Action Framework

On December 12, 2015, history was written in Paris, when 195 countries agreed to work together to curb global warming. Since investment buildings consume about 40% of the world`s energy and contribute 30% of their annual greenhouse gas emissions, people who manage global real estate assets — worth about $50 trillion — are one of the world`s leading decision-makers listening to this call. 1. Resilience as the engine of risk management. The sector is very interested in understanding how to integrate climate change resilience into investment decisions. A recent report estimated that about 35% of REIT real estate were exposed to climate risks. However, the risks associated with climate change go beyond direct physical damage to buildings; They include insurance premiums, economic and demographic damage and the abandonment of the riskiest sites. As a result, resilience becomes a factor in assessing investment risk. According to a survey conducted by the CFA Institute in 2017, 65% of investors have been asked to take ESG issues into account.

Governments are also adapting rules in areas such as calibrating energy and water performance to meet energy consumption and climate change requirements. Portfolios with an ESG strategic management and data management platform are positioned in such a way that they are ahead of the market and will be able to identify properties located in safe areas or meet local environmental compliance standards and inform investment decisions accordingly. Today, many investors recognize that ESG information is essential to understanding the mission, strategy and quality of management of real estate companies. Instead of simply preventing climate-related losses, real estate professionals are now focusing on how to generate profits with a more responsible approach. The GSS covers a wide range of issues that, although not traditionally part of the financial analysis, can still have a financial impact. By addressing the GSS and climate change agenda, this framework includes specific measures to improve returns and ensure the future value of real estate investments: if these risks are not actively addressed, this will not only hinder global efforts to address the climate challenge, but will also hurt long-term returns, undermine economic viability and reduce the calibre of future generations.