Extreme Weather Drives North America’s Real Estate Sector To Double Down On Decarbonization And Building Resilience
North American real estate managers place building resilience as top priority, almost doubling since last year (14% to 27%).
Extreme Weather Drives North America’s Real Estate Sector To Double Down On Decarbonization And Building Resilience
- ESG, sustainability and decarbonization are now having a more significant impact on North American real estate strategies (58%), than EMEA (47%).
- With SEC climate disclosure rules on the horizon, North American respondents also rank meeting corporate sustainability disclosure regulations as a greater priority than those in other regions.
Boston, US: Verdantix, the independent purpose-driven research firm, has revealed that climate change related natural disasters are driving a renewed focus on building resilience and decarbonization across North America’s real estate sector in a survey of 300 real estate and facilities management decision-makers and budget holders.
With some US commercial insurers cutting natural disasters from policies and hiking rates amidst accelerating climate change, the survey reveals that North America’s real estate sector is now prioritizing building resilience above any other objective, a sentiment that has nearly doubled (14% to 27%) in the last year. This is likely due to the increased frequency of climate-related disasters in the US – by September 2023, 23 disasters with damages totalling over $1 billion had been recorded in the year to date, compared to a yearly average of 8 disasters between 1980 and 2022. Despite this, a significant proportion of real estate managers still consider building resilience their least pressing objective (28%), indicating that some are overlooking the growing risk to real estate from climate change.
In addition, ESG, sustainability and decarbonization are having a more significant impact on real estate strategies in North America (58%) than EMEA (47%), highlighting the gap in maturity where European firms have been taking action for longer. Similarly, 33% of North American firms are now actively exploring heat pumps in buildings as an option, the highest of any region.
Amidst looming SEC climate disclosure rules, North American respondents rank meeting corporate sustainability disclosure regulations as a greater priority (52% high priority) than those in APAC (48% high priority) and EMEA (47% high priority). Ninety-six per cent of North American real estate and facilities managers will be collecting ESG data next year, more than either EMEA (89%) or APAC (91%), highlighting the increased pressure for sustainability in the region.
Bill Pennington, VP Research, EHS and Risk Management, Verdantix, comments:
“North American real estate and facilities management decision-makers are responding to more frequent systemic threats to worker safety that cascade across organizations and industries, such as the extreme weather events we saw nationally this year, from flooding in Florida to wildfires in California. ‘Black swan events’ like pandemics have also been a wake-up call to businesses, but companies need to move faster and switch from a reactive response to a proactive approach that tackles risk factors before it’s too late. Enterprises should consider upskilling their boards in climate risk, including through hiring climate scientists to the C-Suite to ensure they have the right guidance in place.”
Claire Stephens, Research Director Smart Buildings, Verdantix, adds:
“With North America traditionally behind other regions in building decarbonization and sustainability, new climate and sustainability disclosure regulations represent a major risk for the real estate sector. We could see insurers pulling the plug on facilities with insufficient climate resilience and investors shunning companies with poor sustainability performance across their real estate. This has galvanized action with real estate teams now placing the highest priority on corporate sustainability disclosure regulations, in addition to building-specific regulations on efficiency. Green technologies such as low-carbon on-site energy generation are also increasingly being rolled out across buildings, particularly in industries such as hotels and leisure. It is now commonplace that real estate departments will have a central role to play for large firms to meet their company-level sustainability targets and ensure compliance.”
Read the full report here: The Seventh Annual Verdantix Smart Building Survey.
