• Nigel Raywood

Threefold increase in damage to commercial property now predicted

Nigel Raywood highlights alarming, yet largely unreported data around anticipated damage to commercial property and companies…

A SIGNIFICANT yet under-reported set of data caught my eye recently. Perhaps the data was a little too dry and clinical in its presentation to capture more attention? However, when you sit back and think about what it’s telling us, a severe global financial emergency around extreme weather events begins to emerge.


For the first time, worldwide analysis has been carried out looking at the damage caused by extreme weather events. Alarmingly, the data linked to 2.1 million commercial properties suggests an already high level of recent damage is set to triple over the next thirty years.


The data gathered by physical climate risk analysts XDI 1000 indicates that events linked to climate change, such as flooding, storms and heatwaves, have already increased by more than a third (36%) throughout Europe and by almost half (45%) across Asia since 1990.


XDI 1000 warned under the current emissions trajectory impacts on assets and productivity could increase threefold by 2050. It said companies listed on exchanges in Asia are the most at risk of asset damage from extreme weather events, particularly flooding. Companies listed on indices in France and the UK were the next ‘most exposed’ to damage.


‘Sobering insights’

According to XDI 1000’s press release, this is the first time such a data set has been published using a “like-for-like methodology” across a sample of more than 2.1 million properties and “providing an independent standardised physical risk benchmark of the world’s leading companies relative to each other, both now and as it changes over time.”


XDI CEO Rohan Hamden described the information as “sobering insights” adding how the findings highlighted the “reality of companies already experiencing losses as a result of extreme weather events caused by climate change.”


He commented: “We should prepare for these impacts to worsen in all markets, but some listed companies and indices will be harder hit than others. We published the XDI 1000 Benchmark because there is currently no single source of truth about the cost of physical risk caused by climate change, because companies are self-assessing climate risk using a myriad of different methods.


“A globally consistent approach to assessing physical climate risk is the only way for regulators, investors and companies to cut through the forest of conflicted self-reporting and see the very real threat that climate change poses to the stability of financial markets.”


No real good news

Unfortunately, there is little other than this consistent approach that can be seen as positive in XDI 1000’s report. Even lower emission scenarios show that increased losses to 2030 are “now largely unavoidable.”


Perhaps the most worrying outcome is that the analysis predicts steady increases in the number and proportion of operational assets owned or operated by companies that will become unavailable due to extreme weather. For example, some will become effectively inoperable due to repeated coastal inundation events.


Time for action? My fear is we’re already way too late here and widespread global damage on an unprecedented scale seems inevitable.


For further information visit the XDI 1000 Insights Page revealing widespread corporate exposure to the financial impacts of physical climate risk, here. Please visit our Linkedin page to comment.

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