Integrating climate adaptation into physical risk models
The impacts of climate change are already beginning to materialise into financial risks. According to the World Meteorological Organization (WMO), climate change-related events over the past five decades have resulted in US$4.3 trillion in reported economic losses. In this report, GIC and S&P Global Sustainable analyse the projected increase in physical climate hazards for global real estate properties held by companies in the S&P Global REIT Index and highlight key takeaways.
Th report finds that physical risks from climate change could cost up to US$559 billion by 2050, affecting 28% of real estate asset value in the S&P Global REIT Index, with rising costs for customers, tenants, building operators, owners, and investors. Existing risk models often overlook the impact of adaptation, providing an incomplete view of climate risks and making it harder for investors to prioritise risk management. Climate adaptation solutions for non-residential real estate like green or cool roofs and wet or dry floodproofing present investment opportunities, with global annual demand for these solutions projected to reach US$29 billion annually by 2050.
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