UN (Environment Programme Finance Initiative)
2022
UN Environment Programme Finance Initiative
The report titled "Managing Transition Risk in Real Estate: Aligning to the Paris Climate Acc" addresses the significant transition risks faced by the real estate sector as global economies move towards decarbonization. It emphasizes the importance of proactive measures that financial institutions must adopt to mitigate these risks effectively. Given the increasing scrutiny on climate-related financial disclosures, this document serves as a crucial resource for stakeholders navigating the evolving landscape of real estate investment. Throughout the report, insights are provided on the state of real estate assets and the challenges they encounter in aligning with net-zero targets. It highlights the climate challenges specific to the sector and offers well-researched recommendations for addressing these issues. The culmination of these insights is aimed at fostering a deeper understanding of how real estate can contribute to broader climate goals while safeguarding financial interests. A key aspect of the resource is its development through the collaboration of various real estate investors and banks, who piloted the Carbon Risk Real Estate Monitor (CRREM) tool under UNEP FI’s Task Force on Climate-related Financial Disclosures (TCFD) programme. The authors detail the experiences of these financial institutions and illustrate the effective deployment of the CRREM tool as a means to measure and manage transition risks. The findings reveal both opportunities and challenges for investors, underscoring the necessity of integrating climate risk considerations into real estate investment strategies. By building on previous work by UNEP FI’s Property Working Group, this project not only contributes to the existing body of knowledge but also invites further exploration into responsible investment practices in real estate. Overall, it serves as a timely reminder of the growing intersection between finance and sustainability.
Real estate faces significant transition risks as economies decarbonize. To mitigate the impact of potential transition risks, financial institutions active in this sector must be proactive.
This report assesses the state of real estate assets and the challenges the sector faces to align to net zero. It provides insights on the climate challenges confronting the real estate sector, and recommendations for addressing them.
To develop this resource, a dozen real estate investors and banks piloted the Carbon Risk Real Estate Monitor (CRREM) tool as part of UNEP FI’s Task Force on Climate-related Financial Disclosures (TCFD) programme. The report authors document the experience of participating financial institutions and illustrate how the CRREM tool can be deployed to effectively measure and manage real estate transition risks. Their findings reveal both the opportunities and the risks for financial institutions investing in real estate assets.
This project builds on work done by UNEP FI’s Property Working Group, now convened by the Principles for Responsible Investment (PRI). Find out more here.