Although many real estate leaders “have got their heads around the climate risk story” not many appreciate the speed with which it is bearing down on conventional business models, according to environmentalist Sir Jonathon Porritt, founder of the Forum for the Future.
One aspect is insurance and in some areas already affected it is hard to obtain cover because insurers are saying that the exposures are too great for them to deal with.
“You think about how that trickles through the whole real estate world – the real estate world depends on insurance – there is no real estate sector without insurance,” Porritt told Richard Betts during the recent ULI Europe Conference in Madrid.
Although the ULI has some “fantastic materials to share with members” members really need to understand the speed of change.
“I still find it very frustrating because the rules of the game that define what companies can or can’t do, still militate against full-on sustainability,” Porritt said.
“They still have to do the numbers first and foremost, they still have to meet their fiduciary responsibilities, they still have to put shareholder-first perspectives in everything they do and sustainability is still very much a second order in terms of those priorities for companies,” he added.
Even companies that are doing sustainability really well are still fighting against a system that essentially wants to promote the old world of economic growth at any cost, rather than a new world where wealth is created on a much more sustainable, regenerative basis, which would actually give better returns for shareholders over time.
Southern Europe and the Mediterranean region is now on the receiving end of a higher degree of climate disruption than almost any other part of the world apart from the Arctic and the Antarctic, Porritt explained. “We’re seeing average temperature increases that are scary, we’re seeing an increase in the number of days of very high temperatures, wildfires, droughts, floods, the whole lot.”
“Everything is chucked at the Mediterranean, one way or another,” he said. “For the built environment, that could look like a 100% nightmare scenario.”
“But if you think about it, what that actually does is strengthen the case for adapting much faster to very different climatic conditions putting the emphasis on the existing asset base.”
He said that in bringing existing assets up to a more resilient state than most buildings are in at the moment presents “huge opportunities”.
“If you can do that with your existing portfolios, occupiers are going to be pretty happy, frankly, because they will know that they are better protected against some of the changes coming down the track.”
Please click on the video above to watch the full interview or listen to the podcast below.