Storms in one part of the world, drought, heat and floods in others - the number of disasters attributable to extreme weather is rising rapidly. According to research by the World Meteorological Organization, extreme weather is four to five times more common today than it was in the 1970s. According to researchers, the amount of damage is even seven times higher than in the past.
This development poses particular challenges for financial service providers. Whether they are financing real estate, insuring it or investing in the sector themselves, banks and insurance companies are confronted with growing risks. Rising sea levels and extreme weather events are only one side of the threat. The other side arises from the transitory risks resulting from the increasing importance of so-called ESG criteria (Environmental, Social, Governance).
ESG criteria - increasing demands on the real estate sector
In the Paris Climate Agreement, the international community committed to limiting further temperature increases to 1.5 degrees Celsius compared to the pre-industrial era. But although the building sector can make a significant contribution to achieving this target, just one percent of buildings worldwide are currently considered CO2-neutral. Regulatory pressure on the real estate sector is therefore likely to increase significantly in the coming years. The same applies to demand from bank customers, who increasingly expect investment properties to meet ESG criteria.
Cloud-based technologies and smart data handling can make an important contribution in this situation by providing the necessary transparency. The data can be used, for example, to calculate the carbon footprint of a real estate portfolio and thus to determine specifically which measures need to be implemented in order to effectively reduce one's own CO2 emissions. The real estate sector already has a large amount of data on the individual buildings in a portfolio. However, much of this data is often stored in a wide variety of systems or there is a lack of uniform standards and procedures for the quality and collection of this data.
Looking into the future of your own real estate portfolio
This is where innovative companies like BuildingMinds and Credium come in with their solutions. BuildingMinds uses Microsoft's cloud environment to bring together all relevant information and create a digital building twin. In this way, the Microsoft partner can help banks, insurance companies and other financial service providers determine the status quo, the future value of a portfolio and the impact of retrofit measures. After all, one of the special features of sustainability in the real estate sector is precisely its long-term nature.
The common data basis and the possibility of complex simulations in the cloud environment provide clarity here and prevent real estate from turning into so-called stranded assets that can no longer meet regulatory requirements or market expectations on the subject of ESG. In a study by Engel & Völkers Investment Consulting (Evic), for example, 58 percent of the investors surveyed expect prices to fall in the medium to long term for properties that are not ESG-compliant. Nine percent even warn of unsaleability.
Public data for more sustainability
Credium is taking a different approach to bringing clarity to the sustainability of a building stock. The Microsoft partner has developed a cloud-based data platform through which it provides users with aggregated building data from public sources. After all, public authorities, agencies, administrations collect a variety of data and make it available to the public, which can be used to make statements about the sustainability and energy needs of individual regions, communities, districts, boroughs or even streets. This includes information from building authorities, data from geobase portals, orthophotos, data on building structures, information from three-dimensional building models. Even at the level of the individual building, reliable statements can be made.
By linking all this data, it is possible, for example, to derive the requirements for energy-efficient renovations in individual neighborhoods or streets. Insurance companies, banks and other financial service providers can take advantage of this knowledge. Not only does such information allow them to better assess ESG risks. They can also develop concrete financing models and enter into targeted discussions with local political decision-makers, for example, on the energy refurbishment of streets, neighborhoods and districts.
This development poses particular challenges for financial service providers. Whether they are financing real estate, insuring it or investing in the sector themselves, banks and insurance companies are confronted with growing risks. Rising sea levels and extreme weather events are only one side of the threat. The other side arises from the transitory risks resulting from the increasing importance of so-called ESG criteria (Environmental, Social, Governance).
ESG criteria - increasing demands on the real estate sector
In the Paris Climate Agreement, the international community committed to limiting further temperature increases to 1.5 degrees Celsius compared to the pre-industrial era. But although the building sector can make a significant contribution to achieving this target, just one percent of buildings worldwide are currently considered CO2-neutral. Regulatory pressure on the real estate sector is therefore likely to increase significantly in the coming years. The same applies to demand from bank customers, who increasingly expect investment properties to meet ESG criteria.
Cloud-based technologies and smart data handling can make an important contribution in this situation by providing the necessary transparency. The data can be used, for example, to calculate the carbon footprint of a real estate portfolio and thus to determine specifically which measures need to be implemented in order to effectively reduce one's own CO2 emissions. The real estate sector already has a large amount of data on the individual buildings in a portfolio. However, much of this data is often stored in a wide variety of systems or there is a lack of uniform standards and procedures for the quality and collection of this data.
Looking into the future of your own real estate portfolio
This is where innovative companies like BuildingMinds and Credium come in with their solutions. BuildingMinds uses Microsoft's cloud environment to bring together all relevant information and create a digital building twin. In this way, the Microsoft partner can help banks, insurance companies and other financial service providers determine the status quo, the future value of a portfolio and the impact of retrofit measures. After all, one of the special features of sustainability in the real estate sector is precisely its long-term nature.
The common data basis and the possibility of complex simulations in the cloud environment provide clarity here and prevent real estate from turning into so-called stranded assets that can no longer meet regulatory requirements or market expectations on the subject of ESG. In a study by Engel & Völkers Investment Consulting (Evic), for example, 58 percent of the investors surveyed expect prices to fall in the medium to long term for properties that are not ESG-compliant. Nine percent even warn of unsaleability.
Public data for more sustainability
Credium is taking a different approach to bringing clarity to the sustainability of a building stock. The Microsoft partner has developed a cloud-based data platform through which it provides users with aggregated building data from public sources. After all, public authorities, agencies, administrations collect a variety of data and make it available to the public, which can be used to make statements about the sustainability and energy needs of individual regions, communities, districts, boroughs or even streets. This includes information from building authorities, data from geobase portals, orthophotos, data on building structures, information from three-dimensional building models. Even at the level of the individual building, reliable statements can be made.
By linking all this data, it is possible, for example, to derive the requirements for energy-efficient renovations in individual neighborhoods or streets. Insurance companies, banks and other financial service providers can take advantage of this knowledge. Not only does such information allow them to better assess ESG risks. They can also develop concrete financing models and enter into targeted discussions with local political decision-makers, for example, on the energy refurbishment of streets, neighborhoods and districts.