The effects of climate change are having an ever-increasing impact on the real estate industry, which will affect buildings and their functions in the future. The predicted risks are far-reaching, from increased cooling demand for buildings caused by rising temperatures to damage caused by flooding due to increased and more intense rainfall events, and even water shortages due to increased periods of drought. To protect buildings from these climate-related threats, it is crucial to incorporate protective measures during the planning phase.
In July 2020, the European Union (EU) introduced the EU Taxonomy Regulation (TR, Regulation (EU) 2020/852). This assessment system was developed as part of the European Green Deal to enable the EU to achieve climate neutrality by 2050. It has been in effect since January 2022 and uses clear rules to classify when a company is operating in a sustainable or environmentally friendly manner. As part of the reporting, a climate risk analysis (CRA) is required, which identifies possible future physical climate risks. The analysis is intended to identify measures that reduce the impact of climate risks.
How do Companies Benefit from a Climate Risk Analysis?
There are various ways companies benefit from a CRA. First, the analysis offers the advantage of identifying future climate hazards. Today’s climatic conditions will most likely differ from those in 40 years. A look into the future allows conclusions about the dangers buildings will face in their second phase of life and which dangers are worth protecting against. This is of great importance for the real estate sector, as buildings are particularly exposed to the dangers of climatic events. They are tied to their location and cannot move if climate hazards become too dangerous.
Another advantage of the CRA is that the analyzed climate hazards can already be considered during the design phase and countermeasures reduce the climate impact of buildings over their lifetime. A CRA may lead to the exclusion of certain locations for construction projects. The analysis offers the advantage of being able to warn investors at an early stage, by identifying climate hazards that will have a strong impact on a location in the future, such as rising sea levels.
By taking countermeasures to the predicted climate risks, the probability of higher real estate valuations increases. The commitment to preserving economic value, as well as long-term climate protection, enables positive discussions with banks and insurance companies.
Finally, since the CRA is part of the reporting required by the EU Taxonomy Regulation it confirms that the considered development is classified as environmentally sustainable.
How do Companies Obtain Proof of Compliance with EU-Taxonomy Regulation?
To provide proof of conformity with the EU Taxonomy Regulation, companies must make a substantial contribution to at least one of the six environmental objectives listed below. At the same time, there must be no significant harm to any of the environmental objectives (so-called “do no significant harm” criterion). The climate risk analysis falls under Environmental Goal #2 ‘adaptation to climate change’ and must be carried out irrespective of the environmental objective for which the substantial contribution is to be made.
What are the Environmental Goals?
- Climate protection
- Adaptation to climate change -> Climate risk analysis
- Sustainable use and utilization of water or marine resources
- Transition to a circular economy
- Prevention or control of environmental pollution
- Protection and restoration of biodiversity and ecosystems
How is a Climate Risk Analysis Carried Out?
A CRA can be divided into four steps:
- Determine the observation period: As Baumann Consulting mainly manages construction projects that aim for long service life, in most cases, the base year is compared with projections from 2040 and 2060.
- Carry out classification of relevant and irrelevant climate hazards: The EU Taxonomy Regulation specifies a range of climate risks that should be analyzed. These include climate hazards that can potentially occur anywhere and climate hazards that only occur in certain regions.
- Conduct analysis of the risks: analyze the identified relevant climate risks and take climate scenarios and the selected observation period into account, if possible.
- Identification of suitable countermeasures: adaptation solutions are developed to limit the effects of the analyzed climate hazards. This step differs greatly depending on the project and requires detailed knowledge of both the planned building and the location.
What are the Climate Risks that have to Be Evaluated?
Climate hazards that can potentially occur anywhere include:
- Temperature change
- Temperature variability
- Cold wave/freeze
- Heat wave
- Heat stress
- Humidity change
- Increased UV radiation
- Change in precipitation patterns and types
- Heavy precipitation
- Floods
- Variability of precipitation or hydrology
- Drought
- Water scarcity
- Forest and wildfires
- Declining water levels
- Declining water quality
- Change in wind patterns
- Storm
- Tornado
- Soil degradation
- Soil erosion
- Landslide
- Land subsidence
Climate hazards that can only occur in certain regions include:
- Permafrost thawing
- Overflow of glacial lakes
- Cyclone/ hurricane/ typhoon
- Ocean acidification
- Increased CO2 concentration and Declining water quality of marine waters
- Saltwater intrusion
- Sea level rise
- Flooding in coastal areas
- Storm surges
- Coastal erosion
- Solifluction
- Avalanche
What Kind of Countermeasures Can Be Implemented?
Countermeasures are far-reaching and vary depending on the project and its location. Measures on the building envelope, building technology, or the exterior are commonly employed. For example, these include the use of light-colored materials, the use of renewable energies, or greening with a variety of plants.
Light colored roofs and materials in the exterior as well as plants reduce the heat island effect. Photovoltaic systems not only reduce energy demand by converting solar radiation into electricity. PV systems prevent direct radiation to the roof and prevent solar heat gains in the building. Water-saving flow restrictors and the collection and reuse of rainwater counteract water scarcity, secure slopes avoid landslides, and suitable measures can be used for every climate hazard.
The consideration of future scenarios in the simulation of thermal room comfort and the implementation of the cooling load calculation with an adjusted Cooling Design Day (CDD), the warmest day of the selected calculation period, ensures that thermal comfort for users is also guaranteed in the future. It should be noted that the countermeasures must be both nature-based and compatible with the local, regional, or national requirements.
This report demonstrates that companies as well as their buildings and users can benefit from a climate risk analysis. Analyzing future climate risks can protect your building from potential damage and give you an advantage over your competitors.
Do you want to protect your buildings and benefit from the advantages of a climate risk analysis?
