Opening the ‘black-box’ of climate risk assessments for real estate portfolios: lessons from The Netherlands

The real estate sector is in the spotlight of EU regulations given its high environmental impact. Technical screening criteria were established, and organisations now need to align with the EU Taxonomy. As these organisations often lack climate change expertise, a large number of (often commercial) providers have developed different methods to support the real estate sector in assessing physical climate risk. This created the challenge of transparency, the lack of which limits trust and the ability to improve, compare and combine the results of different assessments: the ‘black-box’ approaches.

In an attempt to ‘open the black box’ in the Netherlands, a large consortium of financial institutions, knowledge institutes, consultants and governments has developed a ‘Framework for Climate Adaptive Buildings’. We will present this framework with the aim of laying the foundations for a common language and a level playing field for climate adaptation in the built environment. The framework combines an estimation of climate threats to the surroundings of buildings with the vulnerability of the building itself to identify appropriate adaptation measures. We will discuss the process of developing this framework, which featured extensive end-user involvement and co-production. Much emphasis was placed on the comparability and reproducibility of the resulting climate risk assessments by referring to freely available, national-level climate data, with transparency about the underlying methods.

Climate service providers can use the framework as a starting point and build upon it with their existing approaches. As such, the framework ensures a level playing field for climate risk assessments for the real estate sector for Dutch assets. Upscaling the framework to the wider EU region is of great interest, as many investors have assets in multiple countries. A large challenge is the trade-off between comparable EU-wide datasets or less comparable but more reliable local data sources. We will discuss this challenge based on our experiences through the H2020 REACHOUT project before concluding with the takeaways from both the Dutch Framework for Climate Adaptive Buildings and the REACHOUT project.