Real Estate

Property developers, real estate investors and realtors in Canada increasingly need to be aware of:

  • evolving regulations,

  • investor demands, and

  • the growing impact of climate change on property values and insurance costs.

Read on for a brief overview of the situation (with suggested further reading), use cases, and solutions.

Overview

Relevance of Climate Risks

  • Physical risks such as flooding, wildfires, extreme weather events, and sea-level rise are becoming more frequent and severe due to climate change (Remax, 2022).

  • These risks can impact property values, insurance costs, and infrastructure investments (Capital Mortgages, 2024).

  • Industry associations are developing guidance to help ensure professionals’ climate-readiness (REALPAC, 2024).

Quantifying Climate Risks & Financial Impacts

Real estate professionals are increasingly expected to quantify climate risks:

  • The Office of the Superintendent of Financial Institutions (OSFI) now requires federally regulated financial institutions to assess the exposure to physical climate risks for all properties located in Canada (Arcadis, 2024).

  • Tools and resources are available to help quantify climate risks and financial impacts, such as Munich Re's Climate Change and Climate Financial Impact Editions.


Reporting Requirements

While comprehensive mandatory reporting is not yet in place for all real estate professionals, there are several developments pushing the industry towards greater climate risk disclosure:

  • The Canadian government plans to amend the Canada Business Corporations Act to require climate-related financial disclosures for large, federally incorporated private companies (GoC, 2024).

  • The Canadian Securities Administrators (CSA) is expected to propose mandatory climate-related disclosure rules for public companies in 2025 (Osler, 2024). Many private companies may soon be asked to provide climate-related information to their public company customers to help them comply with disclosure obligations.

Specific Considerations for BC

  • The BC Financial Services Authority has outlined approaches to enhance resilience to climate events for both brokerages and consumers (BC FSA, 2024). While not introducing additional disclosure requirements, the Natural Catastrophes and Climate-Related Risks (NCCR) policy signals that realtors should have a broad, holistic, and regional view of disclosure.

  • Realtors in BC should be familiar with where to obtain information on wildfire, flood and other hazard risks, whether from local and provincial government sources and/or commercially available sources.


Think Resilience Inc. can help you to:

  1. Stay informed about evolving climate-related disclosure requirements in Canada and peer jurisdictions (e.g. US, UK, EU).

  2. Develop competencies in sourcing, understanding and communicating information about climate risks at the property and portfolio levels.

  3. Integrate climate risk considerations into property valuations and investment decisions.

  4. Be prepared to disclose relevant climate risk information to clients and stakeholders (e.g., lenders, insurers).

  5. Consider the long-term implications of climate change on property values and development strategies.

Want to better understand how we can help your business? Let’s get started with a 15 minute discovery call today.

Use Case

Scenario

As a REIT managing multiple commercial and residential properties across BC, you recognize the growing importance of understanding and addressing climate-related risks. You want to ensure your portfolio is resilient against future climate impacts while complying with emerging disclosure requirements.

Approach

1. Portfolio-wide Climate Risk Assessment:

  • Engage Think Resilience to conduct a comprehensive analysis of your entire portfolio using Munich Re’s Location Risk Intelligence platform.

  • Gain a clear picture of climate risks across the portfolio to inform investment and divestment decisions.

2. Data Integration and Analysis:

  • Use quantified financial impacts of the most damaging storm and flood events to gauge your risk tolerance and thresholds for action.

3. Resilience Strategy Development:

  • Work with Think Resilience to create tailored resilience strategies for high-risk properties, including both physical adaptations and operational changes.

  • Prioritize cost-effective resilience measures with the highest return on investment.

4. Disclosure Support:

  • Take advantage of Manifest Climate’s AI-powered analysis to carry out a gap assessment against Canadian regulatory requirements (OSFI, CSA) and TCFD-aligned international standards (IFRS S1 and S2).

  • Benchmark your climate and ESG-related disclosures against 3 industry peers.

  • Improve your standing with investors and regulators through robust ESG reporting.

5. Stakeholder Engagement:

  • Participate in workshops facilitated by Think Resilience with property managers, tenants, and local authorities to build consensus on resilience measures.

  • Develop a shared understanding of climate risks and mitigation strategies across your organization.

6. Ongoing Monitoring and Adaptation:

  • Establish a system for continuous monitoring of climate risks and the effectiveness of implemented strategies.

Outcomes

  • Comprehensive Risk Understanding: Gain a clear picture of climate risks across your portfolio, enabling informed decision-making on investments and divestments.

  • Enhanced Property Value: Implementation of resilience measures could lead to a 5-10% increase in property values across the portfolio.

  • Cost-Effective Resilience: Identify and prioritize measures that could potentially save millions in future damages and lost revenue.

  • Regulatory Compliance: Position yourself favorably with regulators and investors who are increasingly focused on climate risk disclosure and management.

  • Long-Term Resilience: Safeguard your portfolio against future climate risks while contributing to sustainable development in British Columbia.

Want to better understand what’s involved in this process? Let’s get started with a 15 minute discovery call today.

Solutions

Think Resilience offers:

We are able to offer competitive pricing and optimize efficiency by using software and AI-powered solutions provided by Munich Re and Manifest Climate.

With a robust ‘first pass’ at climate risk assessment, financial impacts estimates and disclosures review, your business is well-positioned to carry out deeper dives as needed.

Want to see which solution is the best fit for your business? Let’s get started with a 15 minute discovery call today.