The impact of climate change on governance and risk management

Prepared by the Task Force on Climate related Financial Disclosures

One of the essential functions of financial markets is to price risk to support informed, efficient capital-allocation decisions and it is increasingly important to also understand the governance and risk management context in which financial results are achieved. One of the most significant, and perhaps most misunderstood, risks that organisations face today relates to climate change. While it is widely recognised that continued emission of greenhouse gases will cause further warming of the planet which could lead to damaging economic and social consequences, the exact timing and severity of physical effects are difficult to estimate. The large-scale and long-term nature of the problem makes it uniquely challenging, especially in the context of economic decision making.

To help identify the information needed by investors to appropriately assess and price climate related risks and opportunities, the Financial Stability Board recommends for consistent, comparable, reliable, clear and efficient climate related disclosures. The framework considers the impact of climate change on the following four elements: (1) governance, (2) strategy, (3) risk management and (4) metrics and targets. 

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Closing the gap between Investor Relations and Sustainability Teams

Prepared by SustainAbility

Integrating sustainability into investor communications is genuinely difficult and requires internal collaboration.

Too few companies get clear sustainability performance messages out to their investors and one of the main barriers is the internal dynamic between Sustainability and Investor Relations (IR) departments. 

The report makes the case for stronger internal engagement to enable proactive, integrated communications to investors. It starts by outlining five key gaps related with language, time frame, expertise, relationships and resources. It then moves on to examine each gap in detail, exploring the reasons, the pain points and solutions that have been proven to help close the gaps. The report also includes case studies in which companies have successfully applied the solutions to build stronger internal collaboration on investor communications.

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Climate change investment solutions: a guide for asset owners

Prepared by the Global Investor Coalition on Climate Change

The aim of this guide is to provide asset owners with a range of investment strategies and solutions to address the risks and opportunities associated with climate change. The guide is targeted at asset owners and more specifically at trustee boards and investment committees, but also contains insights for asset managers. The guide concludes that there is a need for these actions to be more widely integrated into mainstream investment processes to ensure that investment portfolios are more resilient to the financial implications of climate change. This requires, in part, the development and adoption of new industry norms, tools and expertise that embed climate change into core investment processes, which this Climate Change Investment Solutions guide aims to contribute to.

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Five stage process to implement an organisational energy efficiency programme

Prepared by the World Business Council for Sustainable Development

A guide to developing the business case for saving energy in real estate portfolios.

The toolkit is a practical guide for organisations to plan and initiate energy efficiency programmes. It provides a variety of corporate approaches towards achieving efficient building portfolios, which assist in developing an approach that best fits your organisation.

The tool guides you through a five step process, first the creation of a vision, the planning of the implementation process, and the organisational implementation. This is followed by evaluation and measuring of the outcome and the final step is the conclusion of results and related feedback.

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Inter-connections between risks are becoming stronger

Prepared by The World Economic Forum

A report connecting global risks to local economies.

60 million people, equivalent to the world’s 24th largest country, are forcibly displaced, and crimes in cyberspace costs the global economy an estimated US$445 billion, higher than many economies’ national incomes.

The Global Risks Report 2016 highlights the most significant long-term risks worldwide. The year 2016 marks a forceful departure from past findings, as the risks which the Report has been warning about over the past decade are starting to manifest themselves in new, sometimes unexpected ways and harm people, institutions and economies.

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What can be measured, can be improved

Prepared by EUROCHAMBRES – The Association of European Chambers of Commerce and Industry

An assessment of the transposition of the Energy Efficiency Directive into Member State legislation.

According to the EU Energy Efficiency Directive of 2012, companies are required to regularly undergo mandatory energy audits or implement energy management systems by the December 2015 deadline. At the same time, EU Member States must develop programmes to promote voluntary energy checks to SMEs, including through financial incentives.

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Design impacts economic performance

Prepared by World Green Building Councils

A paper to measure the quantative effect of office design on health, wellbeing and productivity of staff.

One of the key barriers to incorporating health, wellbeing and productivity considerations into business decisions has been confusion around what to measure and how.

This paper proposes a simple, high level framework for measuring organisational and financial outcomes (such as absence rates, staff turnover and medical complaints) and relating those back to the physical features of buildings and employee perceptions. 

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Sustainable shopping centres: energy, performance and value

Prepared by BCSC and CBRE

Are there financial benefits from improving the environmental performance of shopping centres?

According to this research, investing in sustainable features can increase shopping centres' market value by over 5%.

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The Business Case for green building: A review of the costs and benefits for developers, investors and occupants

Prepared by the WGBC in cooperation with PRP, sponsoring partners included Skanska, Grosvenor and Estidama

Research already acknowledged the many benefits of green building, mainly for the environment. But it was not clear whether it is possible to attach a financial value to those benefits, an information crucial to the real estate industry and the investment community.

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Sustainability Metrics - Translation and impact on property investment and management

Prepared on behalf of the UNEP FI Property Working Group by Thomas Lützkendorf and David Lorenz from the Centre for Real Estate at the Karlsruhe Institute of Technology (KIT)

This report seeks to demonstrate that the benefits of managing commercial real estate in a sustainable manner outweigh the perceived burdens of doing so if done in a systematic way.

It has been recognised that while the real estate industry has developed a broadly shared approach to assessing sustainability at the building- and investment vehicle-level, this does not necessarily happen in a co-ordinated manner.

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