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The Real Estate Industry Begins to Grapple With Climate Change

    Waterfronts in Florida. Woodlands in California. Anywhere, really, in Arizona. The real estate industry is finally coming to terms with the increased frequency and intensity of flooding, wildfires, drought, and other climactic effects of the climate crisis. Why? In part, the New York Times reports, because the insurance industry has recognized the high costs of frequent rebuilding in disaster-prone areas, raising prices “significantly over the last 18 months.” Real estate industry groups such as the Pension Real Estate Association and the CRE Finance Council have taken notice as well, and the latter is updating its Investor Reporting Package, used to evaluate prospective projects:

    The update will include disclosures related to sustainability and resilience, like a property’s ability to withstand both acute and chronic stress. The association’s leaders say they started the effort at the urging of members, who have become increasingly concerned about climate-change-related risk.

    One challenge is the lack of standards for measuring, monitoring, and evaluating risk, another is the lack of binding requirements to report potential risks.

    But industry observers believe those changes are coming. The Securities and Exchange Commission proposed a rule in March that would require public companies to disclose their climate-related risks. Once it’s enacted, the practice will eventually influence the private sector.