Navigating the Climate Transition: A Guide for Real-Estate Leaders

Real Estate Players Urged to Act on Climate Change Risks and Opportunities

Climate change has rapidly moved to the forefront of concerns for real-estate players, with investors making net-zero commitments, regulators developing reporting standards, and governments passing laws targeting emissions. The urgency of the climate transition is underscored by the increasing physical consequences of a changing climate, such as storms, floods, fires, and extreme heat.

The critical role of real-estate leaders in the climate transition until 2050 is highlighted, with new responsibilities to revalue and future-proof portfolios. The economic transition and physical risks of climate change pose a significant risk of mispricing real estate assets across markets and asset classes.

Leading real-estate players are advised to incorporate climate change risks into asset and portfolio valuations, decarbonize assets, and create new revenue streams related to the climate transition. Real estate is central to global climate change mitigation efforts, as it drives approximately 39 percent of total global emissions.

To thrive throughout the climate transition, real-estate players are encouraged to take three key actions: incorporate climate change risks into valuations, decarbonize buildings and portfolios, and create new sources of value and revenue streams for investors, tenants, and communities.

Decarbonizing real estate requires understanding the starting point of emissions, setting targets, identifying decarbonization levers, executing plans, and tracking progress. Real-estate players can create new revenue streams by investing in green buildings, green-building materials, on-site services, and differentiated capital attraction.

The coming climate transition will bring seismic shifts to the real-estate industry, impacting asset values, tenant demands, and operational approaches. Real-estate players are urged to build climate intelligence early, understand the implications for asset values, decarbonize, and seize opportunities in supporting the transition. Ultimately, real estate will play a critical role in global decarbonization efforts and continue to shape the way we live, work, and play in the face of climate change challenges.