City level resilience to climate change – Climate change affects everyone, from the remote countryside to the bustling inner cities of our global metropoles. But there are many factors that determine climate change risk, such as location.
Of course, investors are cautious about acquiring real estate in high-risk areas, such as locations with high winds or extreme heat. New mapping tools even help pinpoint the most vulnerable or resilient markets in cities around the world.
All of that is a given – a city can’t change its location. However, it can change the way it deals with these threats. Cities’ methods and the perceived efficacy of their strategies can vary greatly.
Take Vancouver, for example, where the council launched the Greenest City 2020 Action Plan in 2011, aimed at turning the Canadian city into the greenest city in the world. The objectives are ambitious: lowering greenhouse emissions to 6% below 1990 levels, reducing transportation-related emissions by creating higher-density neighbourhoods and reducing buildings’ emissions and energy usage by 20%. From 2020 onward, all new buildings will have to be carbon neutral in all their operations.
And then there is Copenhagen, which has built a series of islets off its coast to create a flood barrier. What’s more, it has built Northern Europe’s largest waste-to-energy plant, drastically reducing the city’s carbon footprint. The plan, which is currently pending parliamentary approval, offers a surprising way to address climate change within cities.
In 2017, Moody’s announced that the way cities managed climate change would be incorporated into their credit ratings. This move showed that the finance industry is taking this risk more seriously than ever. And while no city has faced a credit downgrade just yet, investors would be wise to take heed. Cities that fail to act in this regard could find it difficult to raise capital in the future, limiting their ability to pursue necessary investments.
Are you an investor with assets in locations exposed to climate risks? Then it would be advisable to work together with local government to ensure they take appropriate and sufficient action, in order to remain attractive to investors and capital in the near future.
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