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Efforts are increasing to capture some of this science and turn it into actionable data. Over the past few years, nonprofit services like Moody’s ESG Solutions and Archipelago and nonprofit research groups like the First Street Foundation and Rhodium have evolved to measure an asset’s physical risk. They can often provide detailed, property-level data for projects in the United States; for example, a project on high ground will be considered lower risk even if there is a creek on the property.
But the field lacks established standards. Data analysis firms use different maps, scenarios and methodologies; some consider building types and infrastructure, while others are more fundamental, making it difficult to compare assessments.
And that’s just physical risk. Investors are also wary of “transition risk,” which includes changes to the policy and regulatory environment. For example, if Charleston’s leaders change its zoning code to ban building at the lowest elevations, the city’s land values could change radically. Similarly, a seawall will be partially paid for by increased property taxes. Both options can affect the attractiveness of the city for investors. But most current climate models do not comprehensively address potential changes like this.
Wary investors ask developers about their resilience strategies. Helen Gurfel, head of global sustainability and innovation at CBRE Investment Management, said, “’Have you mitigated that risk?’ we ask,” he said. “We look at every detail”
Some developers have taken advantage of this increased attention. In Charleston, for example, Adam Monroe said his company, Middle Street Partners, has focused on flood mitigation over the past few years. The group is working on two developments in the area, both of which include key features to manage stormwater and keep operations running in the event of a flood.
Michael Maher, CEO of the WestEdge Foundation, which is behind a redevelopment project in one of the most vulnerable areas of the Charleston peninsula, is also taking mitigation seriously. Adjacent to the Ashley River, the complex was built with a solid drainage system and pathways several feet above the ground that allow them to act as protective embankments.
Investors combine mitigation information from developers with data from climate modeling software to create a comprehensive perception of a project’s risk, and then decide to move forward. But some struggle to align competing results from different assessments.
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