How property lawyers can act now on climate change

 

As the first property data business to Pledge to Net Zero, Landmark is committed to not only acting with urgency in the name of climate change, but also empowering the property industry to do the same. But as climate change continues at pace, managing and mitigating against this relatively new area of risk demands a sound foundation of data, insight and understanding.

This is why we have spearheaded a dialogue with experts across the property and real estate industry to deepen and validate our understanding of climate change. We have drawn on expert perspectives to reach some consensus on the task ahead and at the same time, created an urgent call to action for the whole property industry.

The resulting Landmark white paper, Climate Change Reports: The New Frontier of Real Estate Due Diligence, (published November 2022) is a comprehensive discussion about how each part of the property industry sees its responsibilities, where we as an industry can deepen our commitment and how we can all challenge the status quo to take meaningful and timely action.

The consensus among the experts we spoke with is a need for pan-industry alignment on definitions, targets, benchmarks and modelled scenarios. They also all posed a critical question about who is responsible for interpreting climate risk reports.

Taking the temperature of the market

We know that climate change reports will become increasingly important in both residential and commercial property transactions. In a separate September 2022 market research initiative, we found that climate change is on the minds of 70% of home movers. Similarly, residential and commercial real estate property lawyers and conveyancers reported a growing move towards developing and actively engaging with a net zero strategy. For instance, 1over half of commercial real estate lawyers have already improved their buildings’ energy performance, and nearly another quarter have active plans to improve or are considering it. The story is similar for residential solicitors and surveyors, where 43% have already improved their buildings’ energy performance and a further third are making moves to do so. The majority of residential and commercial firms have or are planning green policies around staff travel.

The most common climate change risks for the property industry

With more firms than ever engaging in climate change mitigation at home, the next urgent task is to ensure that the right climate change data is identified for property transactions. Most property law professionals (commercial 88%, residential 85%) believed that flooding is likely to emerge as the top risk in climate change reports across all property types over the next 30 years. Energy performance and subsidence/ ground stability were also flagged as likely areas of risk in the future.

In our white paper, Climate Change Reports: The New Frontier of Real Estate Due Diligence, our data partners, British Geological Survey and JBA Risk Management provide comprehensive breakdowns of their own climate risk data across ground stability and flooding in particular and join the call for a more standardised and urgent approach to reporting on such risks. Right now, only 7% of the law firms we interviewed said that they include a climate change risk report as standard.

Climate change reporting: the way forward

Growing home movers concern suggests that appetite is growing for better data and more specialist advice to mitigate against climate change risks. But in the absence of solid guidance or industry-wide consensus, there is a degree of inertia in climate change reporting – in sharp contrast to the urgency of the issue. For instance, 84% of residential property lawyers say they’re waiting for additional guidance or a mandate from the Law Society before adding climate change risk to searches, but over three-quarters expect nothing to happen in the next 12 months.

We have recently released our climate change report, in both residential and commercial formats. The data baseline to inform the assessment is derived from UKCP18. Developed by the Met Office, this is the most authoritative climate projection data available for the UK. This UPRN-based search is designed to provide an overview of future risk as well as in-depth, advice, and recommendations for managing current environmental risks at the property and is provided within the standard desktop search. It’s also the only report on the market to include transitional risks as well and physical risks. You can read more about our climate change reporting solutions here.