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Report Summary:
How might businesses need to shift their thinking and strategies in response to regulatory changes and growing investor pressure regarding climate-related data? How can mandated data empower investors in pricing climate risk and how might the availability of mandated climate-related data reshape traditional investment decision-making processes?
The Urban Land Institute (ULI) has partnered with Heitman, a global real estate investment management firm, over the past five years to conduct research at the intersection of climate risk and real estate. This fourth report in the series examines how global regulations are driving more widespread, more comprehensive, and more auditable climate disclosure and what these new reporting requirements will mean for real estate investor decision-making. SFDR, local regulations, and the proposed SEC rule are just a few examples of new mandates requiring companies to disclose both GHG emissions and climate risks to their long-term business operations.
Change is Coming: Climate-Risk Disclosures and the Future of Real Estate Investment Decisions explores how global real estate investors plan to use forthcoming regulator-mandated climate data. The report outlines current and proposed climate reporting frameworks and regulations, including the SEC’s proposed mandatory climate reporting. If such regulatory mandates are enacted, they are likely to result in increased data disclosure on climate risk and emissions from much of the real estate industry, public or not, around the globe. In the EU, the Sustainable Finance Disclosure Regulation (SFDR) has been implemented and reporting began in 2021-2022. The International Sustainability Standards Board (ISSB) also released a set of standards, in line with TCFD recommendations, that will be effective January 1, 2024, and may serve as a baseline for future disclosures.
All these existing and forthcoming regulations push the real estate industry participants to follow best practices for transparency regarding climate risks, to report on how they have or plan to adapt to climate impacts already apparent, and to report their progress on achieving operating targets regarding decarbonization. In this report, the Urban Land Institute and Heitman examine what new reporting requirements will mean for real estate investors, with a focus on how global real estate investors plan to use forthcoming regulator-mandated climate data. The desire for information about physical risk is present for real estate assets, and regulatory mandates will make data high quality, more comprehensive and more auditable.
Also, in the ULI-Heitman Climate Risk series:
- Climate Risk and Real Estate Investment Decision-Making
- Climate Risk and Real Estate: Emerging Practices for Market Assessment
- Climate Migration and Real Estate Investment Decision-Making
Authors:
- Maryann Haggerty
Report Summary: How might businesses need to shift their thinking and strategies in response to regulatory changes and growing investor pressure regarding climate-related data? How can mandated data empower investors in pricing climate risk and how might the availability of mandated climate-related data reshape traditional investment decision-making processes?
The Urban Land Institute (ULI) has partnered with Heitman, a global real estate investment management firm, over the past five years to conduct research at the intersection of climate risk and real estate. This fourth report in the series examines how global regulations are driving more widespread, more comprehensive, and more auditable climate disclosure and what these new reporting requirements will mean for real estate investor decision-making. SFDR, local regulations, and the proposed SEC rule are just a few examples of new mandates requiring companies to disclose both GHG emissions and climate risks to their long-term business operations.
Change is Coming: Climate-Risk Disclosures and the Future of Real Estate Investment Decisions explores how global real estate investors plan to use forthcoming regulator-mandated climate data. The report outlines current and proposed climate reporting frameworks and regulations, including the SEC’s proposed mandatory climate reporting. If such regulatory mandates are enacted, they are likely to result in increased data disclosure on climate risk and emissions from much of the real estate industry, public or not, around the globe. In the EU, the Sustainable Finance Disclosure Regulation (SFDR) has been implemented and reporting began in 2021-2022. The International Sustainability Standards Board (ISSB) also released a set of standards, in line with TCFD recommendations, that will be effective January 1, 2024, and may serve as a baseline for future disclosures.
All these existing and forthcoming regulations push the real estate industry participants to follow best practices for transparency regarding climate risks, to report on how they have or plan to adapt to climate impacts already apparent, and to report their progress on achieving operating targets regarding decarbonization. In this report, the Urban Land Institute and Heitman examine what new reporting requirements will mean for real estate investors, with a focus on how global real estate investors plan to use forthcoming regulator-mandated climate data. The desire for information about physical risk is present for real estate assets, and regulatory mandates will make data high quality, more comprehensive and more auditable.
Also, in the ULI-Heitman Climate Risk series:
- Climate Risk and Real Estate Investment Decision-Making
- Climate Risk and Real Estate: Emerging Practices for Market Assessment
- Climate Migration and Real Estate Investment Decision-Making
Authors:
- Maryann Haggerty
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Heitman Research Partner
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As an expert in climate-related financial disclosures and real estate investment decision-making, I bring a wealth of knowledge and experience to the discussion surrounding the article titled "Change is Coming: Climate-Risk Disclosures and the Future of Real Estate Investment Decision-Making." Over the years, I have closely followed the developments in this field, staying abreast of regulatory changes, investor pressures, and the evolving landscape of climate-related data in the real estate sector.
The Urban Land Institute (ULI) and Heitman, a global real estate investment management firm, have collaborated extensively over the past five years to conduct in-depth research at the intersection of climate risk and real estate. This collaboration has resulted in a series of reports, with the fourth installment examining how global regulations are shaping climate disclosure practices and their implications for real estate investor decision-making.
The article mentions several key concepts and regulatory frameworks that are crucial to understanding the landscape of climate-risk disclosures and their impact on real estate investment. Some of these include:
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SFDR (Sustainable Finance Disclosure Regulation):
- The Sustainable Finance Disclosure Regulation (SFDR) has been implemented in the European Union, with reporting commencing in 2021-2022. SFDR is designed to enhance transparency in the financial industry by requiring companies to disclose information related to sustainability factors, including climate risks.
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ISSB (International Sustainability Standards Board):
- The ISSB, aligned with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), has released a set of standards effective from January 1, 2024. These standards are expected to serve as a baseline for future disclosures, providing a framework for reporting on climate risk and emissions.
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SEC (U.S. Securities and Exchange Commission) Proposed Rule:
- The article mentions the proposed rule by the SEC, which is one of several regulatory initiatives requiring companies, including real estate firms, to disclose both greenhouse gas (GHG) emissions and climate risks. This rule, if enacted, is anticipated to lead to increased data disclosure on climate risk and emissions within the real estate industry globally.
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Climate Reporting Frameworks:
- The report outlines current and proposed climate reporting frameworks and regulations. This includes an examination of how these frameworks, such as those proposed by the SEC, are likely to result in more comprehensive, auditable, and widespread climate disclosures.
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Desire for Information about Physical Risk:
- The report emphasizes the growing desire for information about physical risks to real estate assets. Regulatory mandates are expected to elevate the quality, comprehensiveness, and auditability of climate-related data in response to this demand.
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Best Practices and Transparency:
- Existing and forthcoming regulations are pushing real estate industry participants to follow best practices for transparency regarding climate risks. Companies are urged to report on their strategies for adapting to climate impacts, and to provide updates on their progress toward achieving operating targets related to decarbonization.
This comprehensive approach, encompassing regulatory changes, global initiatives, and investor expectations, underscores the transformative impact of climate-risk disclosures on real estate investment decision-making. The insights provided in the article shed light on how the industry is evolving in response to the imperative of addressing climate-related challenges.
