Our industry is engaged in an important dialogue to improve sustainability through ESG transparency and industry collaboration. This article is a contribution to this larger conversation and does not necessarily reflect GRESB’s position.
100 Resilient Cities defines urban resilience as ‘the capacity of individuals, communities, institutions, businesses, and systems within a city to survive, adapt, and grow no matter what kinds of chronic stresses and acute shocks they experience’. While this definition is set in the urban context, it is also applicable to suburban and rural areas. It is worth highlighting here that the key of resilience is not only to survive and adapt, but also to grow, regardless of the challenges experienced.
The past few years have seen an increasing demand for information related to climate change and resilience by investors and other stakeholders in the built environment. The demand comes with a need for the information about risks and opportunities to be robust, comparable and consistent.
Resilience is a key aspect of a holistic approach to risk management at an asset or portfolio level, and it encompasses numerous valuable perspectives. Resilience planning aims not only to minimise the risks associated with climate change for assets and portfolios, but also to maximise the potential opportunities stemming from a transition to a more sustainable, low-carbon economy.
Climate change directly affects the transition to a low-carbon economy, which may entail extensive policy, legal, technology and market changes to address relevant mitigation and adaptation requirements. Resilience planning addresses the risks related to the transition to a low-carbon economy, whether they be reputational ones, or those related to the use of certain technologies and functional obsolescence. Finally, it may serve as a hedge on potential policy changes and regulatory compliance risks. On the other hand, as part of the effort to mitigate climate change, the use of sustainable, low-carbon technologies and the more efficient use of water, energy and resources, results in lower operating costs and consequently increased occupancy and reputational benefits.
Climate change-related events and natural hazards are responsible for major risks to real assets and their occupants. Planning for those risks involves protecting the property and its users, but also the environment. Floods are a significant source of risk across multiple regions and the economic consequences are often severe. Goal 11 of the United Nations’ SDGs focuses on ‘sustainable cities and communities’, aiming to ‘significantly reduce the number of deaths and the number of people affected and to substantially decrease the direct economic losses relative to global gross domestic product caused by disasters, including water-related disasters’ by 2030. Apart from the initial effects of being flooded, once flood water has been drained, significant resources (time and cost) are required to clean, re-fit and re-open buildings for operation. This has major impacts on business continuity that can be costly and time-consuming to manage. Insurance has traditionally been seen as a protection in the event of natural hazards. While this may cover the physical damage to the building, insurance does not cover the depression in property values post-event, the potential rise of property taxes to fund infrastructure repair, or capital improvements required to meet new legislation. Understanding the risk of flooding and the risks of other natural hazards to which an asset is exposed, is the first step to managing these risks. The implementation of planning supports the minimisation of recovery times and business interruption.
The transition to a low-carbon economy is linked to policy and legal or to technological and market changes that will take place to address adaptation and mitigation to climate change. Those risks might pose significant financial and reputational pressures to organisations. Assessing and identifying the risks early is critical, and it should involve their potential impact to assets’ value, building users and the surrounding community. At the same time, there are transition opportunities linked to energy efficiency and the use of low-carbon or renewable sources, the resulting cost savings, and the development of new products or access to new markets that should be evaluated and maximised.
Social risks are particularly apparent and relevant now, as we witness and experience the impacts of COVID-19 to the wider economic and human communities. This crisis has made clear the interactions between different systems and the vulnerabilities asset value is exposed to from social risks. Resilience at the asset level is the first step of understanding and preparing in the context of the broader community. The next includes identifying opportunities that can benefit not only an asset or an organisation, but also the wider community to which a particular asset contributes. Therefore, planning and decision-making should not only relate to and protect a specific asset and its occupants, but also intentionally and deliberately seek to protect neighbouring communities and interdependent infrastructure.
One of the most well-known definitions of sustainable development is, ‘a development that meets the needs of the present without compromising the ability of future generations to meet their own needs’. Evaluating the sustainability of a building means that we should not only consider its performance today, but also make decisions that will protect and allow for its performance in the future. As such, resilience is an important part of sustainability, rather than an add-on or an alternative approach. BREEAM is the first assessment method in the world to make this integration explicit and to offer a product that incorporates resilience within sustainability of buildings and communities in a single certification scheme.
This article was written by Eleni Soulti, Principal Delivery Consultant and Breana Wheeler, Director of Operations at BREEAM.