Climate change threatens real estate returns
Institutional investors are urged to act, as climate change poses a threat to property returns, according to Mercer’s latest report, Investing in a Time of Climate Change – The Sequel 2019.
Mercer’s climate scenario model is consistent with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations and enables investors to assess climate-related financial risk for a total portfolio, across all asset classes and industry sectors, to quantify a forward-looking “climate impact on return” over multiple decades.
The Sequel 2019 models three climate change scenarios, a 2°C, 3°C and 4°C average warming increase on preindustrial levels, over three timeframes — 2030, 2050 and 2100. The longer timeframe (Mercer’s 2015 report was modeled to 2050) provides greater visibility into the expected effects of natural catastrophes and resource availability for each temperature increase. A new stress-testing addition to the model enab