Climate risk management for real estate
Identifying climate risks in the real estate sector and taking targeted action
Address climate risks proactively through sound analyses and ensure the long-term profitability of your properties.
The impact of climate change on the real estate sector
The global rise in greenhouse gas emissions and the resulting temperature increases are profoundly affecting the entire climate system. This also poses major challenges for the real estate industry.
One example is the extreme precipitation events observed in Europe in recent years, which led to massive financial losses. The 2024 intense summer storms in Switzerland caused losses of CHF 160 to 200 million, according to the Swiss Insurance Association (SVV). Likewise, the flooding in Germany’s Ahr Valley and Erft River in July 2021 resulted in damage amounting to at least EUR 40.5 billion, with a large part stemming from destroyed or damaged properties.
For property owners and financial institutions alike, these long-term risk exposures are critical to the valuation and management of real estate investments.
Climate experts warn that extreme weather events will only become more frequent and intense in the coming years, putting the long-term economic viability of real estate assets increasingly at risk.
Climate risk management: A call to action for all stakeholders
The financial risks associated with the various impacts of climate change require specific action from various stakeholders:
- Companies subject to the Corporate Sustainability Reporting Directive (CSRD) are obliged to conduct climate risk analyses. In doing so, they must assess both the impact of climate change on their business and their operations’ impact on the climate.
The EU taxonomy defines which economic activities are considered sustainable. Companies that wish to declare their activities as taxonomy-compliant must also carry out a climate risk and vulnerability analysis to prove that their operations are resilient to the effects of climate change. - Banks and insurance companies are exposed to climate risks on multiple levels. In addition to direct damage to buildings, these risks can also jeopardize the stability of the entire financial market, particularly in lending, risk management, and insurance services. For this reason, banks and the Federal Financial Supervisory Authority (BaFin) in Germany require both simple and taxonomy-compliant climate risk and vulnerability analyses. In Switzerland, banks and insurers are subject to Financial Market Supervisory Authority (FINMA) requirements, which stipulate that all investment risks – including physical climate risks – must be identified, assessed, and disclosed. In addition, banks should identify climate hazards early and integrate them into their risk models. Failure to assess these risks adequately may result in mispriced loans, rising claims, and increasing capital reserves.
- Project developers and building owners may need to perform both simple climate risk and vulnerability analyses and taxonomy-compliant analyses for specific DGNB (German Sustainable Building Council), BREEAM, or SNBS (Swiss Sustainable Building Standard) certifications.
- Property owners need detailed insights into which climate risks are likely to affect them in the future. This is an essential basis for developing targeted adaptation strategies and countering risks such as flooding or heat waves in the long term. In Germany, building and portfolio owners must conduct comprehensive climate risk and vulnerability analyses to demonstrate sustainable management under the EU Taxonomy.
The common thread between these requirements is the need for a physical climate risk assessment based on one or more locations. An established approach for this analysis is the use of climate models that simulate the future development of variables such as temperature, precipitation, wind speed, and sea level, taking into account the uncertainties of future emissions. When combined with specific building characteristics, this analysis also enables estimates of potential financial damages.
Our services
Evaluation of physical climate risks
We analyze data at both asset and portfolio levels, delivering a detailed report including graphs and data to support strategic decision-making.
Our analyses enable financial institutions, investors, and companies to evaluate long-term climate risks in a sound and systematic manner. By integrating these insights into their decision-making processes, they’re able to minimize financial losses and ensure regulatory compliance.
Actionable results
The analysis results are presented in a structured report that provides clear answers to the following questions:
- Which climate risks are relevant to my portfolio today and in the future?
- What is the level of uncertainty?
- How high is the financial risk?
- What adaptation measures are available for each risk?
Natural hazards
Would you like to know which natural hazards may already be affecting your properties today?
Portfolio risk rating distribution
Based on individual asset valuations for various climate hazards in both current and future climate scenarios.
A strong partnership
Our climate risk management services are powered by our close collaboration with CLIMADA Technologies, an ETH Zurich spin-off. The combination of in-depth real estate knowledge and innovative technology expertise enables us to efficiently support our clients in climate risk reporting.
Our evaluation covers all 28 variables required by the EU Taxonomy, using the latest climate models and emission scenarios.
Your advantages
Efficiency
Minimal effort on your part: Our automated process requires only a few details about your properties.
Precise evaluations
Thanks to our database, state-of-the-art methods, and strong ties to research institutions, we always use the latest global datasets.
Versatile application
Get exactly the data you need, whether at asset level or for entire portfolios.
Complete solutions
Upon request, we offer advice on adaptation measures, risk dashboards and tools (including risk assessment), and platform integration via Wüest Dimensions & APIs.
Sustainability and ESG strategies, circular economy consulting, collecting consumption data, energy monitoring, building certifications, energy performance certificates, recording of the construction quality, climate and CO2 solutions, sustainability reporting and much more.
