The growing number of weather-related disasters due to global warming have brought environmental, social, and governance (ESG) issues front of mind for investors and experts in commercial real estate, according to Yardi Matrix’s new research.
From wildfires to rising sea levels, the study found that climate-related events have created an urgency for businesses to act on ESG criteria. More than 400 weather events caused widespread damage around the globe, totaling $268 billion in 2020 alone, according to insurance broker Aon. This figure included a record $63 billion caused by severe weather events. In 2017, Hurricane Harvey inflicted $125 billion of damage in Houston, while wildfires damage costs in the past three years were estimated at more than $10 billion, Aon said.
“Leading real estate investment managers and institutional investors are increasingly recognizing climate risk as a core real estate issue that is beginning to affect their decisions at the market level as well as at the asset level,” the research stated, citing “Climate Risk and Real Estate: Emerging Practices for Market Assessment,” a 2020 report by ULI and Heitman.