2022 Spring Issue - 89

OUTLOOK2022
Assessing the Future
Savvy investors who are tracking climate risk at the
individual-asset level also need to be aware of how
well prepared the communities they're in are to
handle climate change.
Swett sees investors paying more attention to the
resilience of urban infrastructure and to planning and
zoning boards at the local level.
" Our clients appreciate that some of the most
risky elements for buildings are elements they don't
control, " he says. " A building might be looking pretty
good for 20 or 30 years, but a critical piece of infrastructure
in the neighborhood is not, like a substation
or a critical roadway that's below a storm-surge level.
They can only control so much of their own destiny. "
Keenan recommends abolishing the ESG silo. " We
need to mainstream ESG into operations, risk management,
and board-level governance, " he says. " It
should be part of the day-to-day challenges. "
Heitman's Craft is encouraged by the advances in
the past five years, such as flood risk data becoming
available to homebuyers. A 2019 paper from the
Journal of Financial Economics found that homes
exposed to sea-level-rise risk sell for 7 percent less
than others.
" With the growing transparency of climate data,
investors and homebuyers are beginning to price that
risk back into the deal, " she says.
Taylor sees " a risk that capital will not flow to
places that are vulnerable; investors might turn away
from perceived risky areas. For an individual institution
that may make financial sense, but from a societal
level, it's problematic, " he says. " Turning off the
spigot without a plan has a lot of historical antecedents
about capital being taken from certain communities,
which we should take caution from. "
Solutions for every place and every subdivision
are going to be different. " The debate about how to
solve the problem in the Netherlands is going to look
different from in South Florida, " Taylor says. " But
stakeholders are getting together to create ways of
investing and retrofitting the built environment that
can balance these tensions. It's going to require the
investment community to build its capacity to understand
and engage with those conversations where
they invest. "
" We might not know exactly what we need to
build in Boston or New York City or Miami right now,
but we know we will need protection and need fundSPRING
2022
URBAN LAND
89
ing, " Swett says. " So why not create millage that we
can bond against when we need to? We need to get
creative about funding now, in the way a condo association
collects funding for a future roof repair, even
though it doesn't need it now. "
Recently, Jane Gilbert, Miami's chief heat officer,
spoke to the Financial Times about her general outlook
for the city: will it even exist in 30 years? The
answer depends on her mood, but on that day she
was feeling optimistic-she put the odds at 50/50.
Addressing climate change and migration requires
investors to broaden their time horizons from a
10-year holding period to longer-term thinking.
" A community might not be sustainable in 150
years, " Siders says. " People might not have to leave
right now, but we don't want people moving into
those risk-prone areas in 140 years. The big question
is: how do we navigate the space between now
and then? " UL
GRACE DOBUSH is a freelance journalist based in Berlin.
Addressing climate
change and migration
requires investors to
broaden their time
horizons from a 10-year
holding period to
longer-term thinking.
SHUTTERSTOCK
2022 Spring Issue

Table of Contents for the Digital Edition of 2022 Spring Issue
