Making physical climate risk assessments relevant to the financial sector – Lessons learned from real estate cases in the Netherlands

Emmanuel M.N.A.N. Attoh*, Karianne de Bruin, Hasse Goosen, Felix van Veldhoven, Fulco Ludwig

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

4 Citations (Scopus)

Abstract

Climate change is an important additional risk for the financial sector. For (large) investments in real estate, it is becoming increasingly important to take climate related risks into account. Yet, generating tailored physical climate risk information to make meaningful decisions about investment portfolios remains difficult. Using literature review, semi-structured interviews and reflection on four case studies implemented in the Netherlands, this paper presents lessons learned and recommendations for improving Physical Climate Risk Assessments (PCRA) for the financial sector. Results from the literature review show that simply selecting a PCRA methodology does not guarantee uptake of information by end-users, because there is no single approach that is suitable for all contexts. From the case interviews, we conclude that effective PCRA information is helpful for the financial sector in several ways; first, it supports investors to pinpoint which assets need attention and how much money is required to mitigate the impacts. Second, they serve as a template upon which clients make purchasing decisions. Third, they serve as a tool for determining the choice of building materials and the structure of properties. Fourth, they assist firms in the development of plausible adaptation strategies. Furthermore, we identified five cardinal points (that incorporate the perspectives of both providers and end-users) to improve the PCRA process: 1) Engagement and co-production, 2) Needs identification, 3) Data availability and quality, 4) Internal integration, and 5) Communication. These recommendation points will serve as a valuable reference to guide the selection and implementation of the most appropriate PCRA method for a given situation.

Original languageEnglish
Article number100447
JournalClimate Risk Management
Volume37
DOIs
Publication statusPublished - Jan 2022

Keywords

  • Case studies
  • Climate change
  • Climate risk
  • Finance
  • Netherlands
  • Real Estate

Fingerprint

Dive into the research topics of 'Making physical climate risk assessments relevant to the financial sector – Lessons learned from real estate cases in the Netherlands'. Together they form a unique fingerprint.

Cite this