Climate shocks and stresses can undermine the stability of your assets, increase their vulnerability and impact their value.
Climate change is having a profound and worsening effect on offices, factories, and other physical assets all across the world. Increasingly frequent extreme weather events inflict immediate physical damage by dislodging tiles and breaking windows. Meanwhile, slower-onset hazards like rising sea levels and heavier precipitation create gradual issues like rot and metal corrosion that weaken a building’s structure. Together, these shocks and stresses can undermine an asset’s stability, increase its vulnerability and, ultimately, reduce its value.
Adaptation is crucial
As the recent report from the Intergovernmental Panel on Climate Change (IPCC) made clear, stakeholders can moderate the risks associated by making buildings climate-resilient. This involves implementing adaptive measures such as using lighter, more durable materials, insulating key electrical equipment from flooding and leaks, and fortifying foundations against subsidence.
While adaptive measures are vital to protecting buildings from problems like corrosive salt sprays and thermal aging, they can also be extremely expensive. According to one UN estimate, global spending on adaptation could reach as high as $500 billion a year by 2050. Adaptive efforts also carry the risk of maladaptation, which is where poorly-planned actions end up making an asset more vulnerable to climate change.
Understanding climate-related risks
To determine which adaptive measures would offer effective and cost-efficient protection, stakeholders must first understand the specific climate-related risks associated with a particular building. Their analysis must incorporate present risks, as well those that are likely to emerge over their assets’ often decades-long lifespans. For completeness, this longer-term view should consider multiple time horizons and climate scenarios, such as those recommended by the Task Force on Financial Climate-related Disclosures framework that, from November 2023, has been absorbed by the International Sustainability Standards Board (ISSB).
A building’s climate-related risks primarily depend on three overarching variables: its location, its environment, and its design. For example, a shopping mall based in the middle of a large, equatorial city will be especially vulnerable to rising humidity and extreme temperatures. A tall beachside condominium, on the other hand, will be more susceptible to accelerating wind speeds and driving rain.