2017 was the most expensive year on record for US natural disasters, totaling a whopping $306 billion.
In the article Our Expensive Climate, Sarah Finnie Robinson notes that these staggering losses mean the insurance industry took a pounding in 2017. As this is not an industry to take things lying down, we can expect to see repercussions.
Mark Carney, Governor of the Bank of England, said in a speech to Lloyd’s of London:
While there is always room for scientific disagreement about climate change (as there is with any scientific issue) I have found that insurers are amongst the most determined advocates for tackling it sooner rather than later. And little wonder. While others have been debating the theory, you have been dealing with the reality.
A New Reality
To limit risk exposure, corporations are being forced to re-examine their policies. Increasingly, investors want to know how a company is acting on climate risks and whether they are reporting transparently.
According to Robinson, major institutional investors are beginning to ask questions such as:
- How is the business model developing resiliency against a changing climate?
- What are the physical impacts on financial assets likely to be?
- What are the liability risks associated with extreme-weather damages, which are increasing year after year?
- Do employees have a basic understanding of the business risks associated with climate change and what their company is doing in response?
Real money rides on whether a corporation can provide satisfactory answers to these questions.
What can building owners do?
Because building portfolios are at the center of climate-related liability, addressing the correct issues is essential for corporations to understand, report on, and ultimately reduce, risks at each property.
The questions below, which are criteria from BREEAM In-Use, are a good place to start. They guide property managers through the process of implementing risk-mitigation policies. BREEAM has been at the forefront of resilience planning since the 1990s.
- Have emergency plans been developed to deal with threats from all relevant natural hazards?
- Is the building located in a low or zero flood risk area?
- Has a fire risk assessment been carried out?
- Is there a fire manager or other member of staff in place who manages, monitors, and initiates reviews of the relevant procedures as identified in the fire risk assessment?
- Is there an emergency plan in place that includes strategies for the protection of property and/or the environment?
- Is a policy to enhance the protection of the asset from risks arising from natural hazards in place?
- Are secondary containment areas checked regularly to ensure that they remain effective?
- Has an assessment of the site been performed to check for potential land contamination issues?
- Is a response plan in place to deal with pollution incidents in line with national standards or best practice guidelines?
Do these questions sound doable and relevant to you? If so, check out BREEAM In-Use, a new-to-the-US but globally widely-adopted, benchmarking and certification method for existing buildings. It’s based on nearly 100 years of science-based research.
As a licensed BREEAM assessor, I can coach you through this green building system, helping you to not only improve building operation and performance, but satisfy your investors as well.