T
he second annual C Change Survey from the Urban Land Institute (ULI) reveals a growing awareness and commitment among real estate investors to integrate climate-related financial risks into their decision-making processes. A staggering 93% of respondents report incorporating transition risks into their investment decisions, indicating a clear business case for decarbonization.

    However, significant implementation challenges persist, with 61% of respondents citing a lack of knowledge regarding the right methodology and datasets as a key barrier. Aleksandra Smith-Kozlowska, Director of Research at ULI Europe, notes that while the industry is moving in the right direction, education and improved knowledge are essential to overcome these barriers.

    The survey highlights that regulation related to minimum energy performance standards remains the top concern for organizations, with 75% reporting an increase in transition risk importance over the past year. The cost of decarbonization and embodied carbon are emerging as significant issues, with nearly 94% of respondents stating that transition risks have impacted their portfolio strategy.

    Interestingly, while some organizations reported divesting from assets facing transition risks (30%), a majority (51%) allocated capital expenditure to address these risks, indicating a commitment to invest in retrofitting and decarbonization initiatives. The survey also shows that transition risks continue to impact acquisitions, with 53% of organizations halting acquisitions following an assessment.

    The industry's awareness of carbon pricing as a tool for decarbonization is growing, with a 21% increase in respondents using voluntary internal carbon pricing mechanisms. However, the lack of wider industry adoption remains a significant barrier, citing concerns about competitiveness and the need for improved understanding of carbon pricing mechanisms and best practices.