Why climate resilience is a strategic advantage for asset managers
While the focus in recent years for many real estate investment managers has been and continues to be on managing transition risk, physical climate risk is increasingly becoming a material financial concern. Floods, heatwaves, storms and other climate events are becoming more frequent and severe.
In June 2025 UK Green Building Council (UKGBC) launched its Climate Resilience Roadmap. It summarises the scale of the problem, namely that by 2050 one in four properties in England will be at risk of flooding from rivers, the sea, or surface water, with flood damage costing the UK economy approximately £1.3 billion annually.
At the same time, extreme heat is emerging as a parallel threat to asset value and public health. The 2022 heatwave alone resulted in over 3,000 excess deaths, underscoring the growing human and economic costs of rising temperatures. Thus, UKGBC urges the UK government to declare a state of emergency on identified most material risks.
The risk extends beyond asset performance—it affects building occupants. For instance, overheating has been shown to lower workplace productivity and negatively affect occupant health.
Other direct consequences for real estate investment managers include:
Insurance costs are rising sharply in high-risk regions, and in some cases, cover is becoming unavailable.
Asset liquidity and value is declining where risk perceptions are high, especially in flood-prone or overheated areas. Research from the European Central Bank suggests that exposure to extreme weather events for commercial real estate in Europe can see loss in investment value of up to 24%.
Supply chains and facility operations are increasingly disrupted by weather extremes.
Financing is becoming more expensive or restricted for assets without climate adaptation plans.
Regulators, particularly in the EU and UK, are tightening expectations on climate-related disclosure and risk management.
Given these realities, climate is now an intrinsic financial variable, not just an environmental one. Understanding and managing both transition and physical climate risks is becoming foundational in understanding an asset’s resilience.
What is climate resilience in the real estate context?
Despite its growing relevance, there is no universally agreed definition of climate resilience. Different organisations interpret it in varied ways, largely depending on whether they focus solely on physical climate risks or take a broader view that includes transitional risks as well.
For instance, the UKGBC focuses its definition on physical climate risks. It describes climate resilience as the ability of a system, community, or society exposed to climate hazards—such as extreme weather events, wildfires, or rising sea levels—to resist, absorb, accommodate, and recover from these impacts. This definition emphasizes a proactive approach to managing physical climate threats, ensuring that individuals, infrastructure, and ecosystems can adapt and thrive in a changing climate.
In contrast, the Intergovernmental Panel on Climate Change (IPCC) adopts a more integrated perspective. It defines climate-resilient development as a process that incorporates both greenhouse gas mitigation and climate adaptation, positioning resilience as a pathway to long-term sustainable development. This dual focus reflects the reality that tackling climate change requires not only reducing emissions but also preparing for its inevitable impacts.
This more holistic view is also embraced by the Better Buildings Partnership (BBP), which in 2022 published its Climate Resilience Guide. The BBP encourages real estate organisations to publicly commit to a resilience strategy that includes three core pillars:
Mitigation – Establishing a credible path to net zero carbon before 2050.
Adaptation – Ensuring operational readiness for a future of more frequent and severe climate-related disruptions.
Disclosure – Transparently communicating climate-related risks and strategies with investors, regulators, and stakeholders.
In our view, a broader definition of climate resilience—one that fully integrates both transitional and physical risk strategies—is the right approach because it highlights how interconnected these efforts are in tackling climate challenges. Net zero pathways focus on cutting emissions, addressing transitional risks, while adaptation plans manage the unavoidable physical impacts already happening due to climate change. Ultimately, whether the focus is narrow on physical hazards or broad to include systemic change, one thing is certain: resilience is no longer optional—it’s a fundamental part of any strategy that aims to be ready for the future.
The UKGBC Climate Resilience Roadmap explained
The Roadmap has been developed through close collaboration with industry leaders, policymakers, and climate experts, resulting in a practical, sector-wide guide on how to embed climate resilience across all levels—from national policy to asset and project delivery.
It targets the five most pressing climate hazards for the UK: flooding, overheating, drought, wildfires, and storms, treating them as urgent national threats. This focus aligns with the BBP Climate Resilience Guide, which also highlights cold spells and sea level rise, and other additional ones for consideration in its Acquisition Sustainability Toolkit.
The core message is clear: the cost of inaction will exceed the cost of adaptation. This is backed by findings from the EDHEC Climate Institute and the The Cost of Inaction - CPI report by CPI, which quantify the economic consequences of delayed resilience measures.
For asset managers, the implication is direct: investing in resilience today safeguards the long-term security and financial performance of real estate portfolios, while also reducing future operational and capital expenditures.
How to embed climate resilience in the business process
The Roadmap calls on the built environment and investment sectors to make climate resilience a core part of everyday practice, offering a clear, four-step approach that supports all stakeholders—regardless of where they are starting—and places vulnerable communities at the heart of the response:
Be aware and educated – Understand local climate risks, identify systemic vulnerabilities, and clarify your organisation’s role in strengthening resilience.
Anticipate – Conduct forward-looking risk assessments to evaluate exposure, sensitivity, and adaptive capacity across portfolios.
Prepare and adapt – Implement measures to reinforce assets, infrastructure, and communities—prioritising scalable, nature-based solutions.
Sustain resilience – Establish feedback loops to monitor progress, foster cross-sector collaboration, and build long-term capacity to withstand future shocks.
These steps provide a coherent and actionable strategy to make climate resilience a sustained, strategic, and collaborative priority throughout the property lifecycle.
What practical tools are provided in the UKGBC Climate Resilience Roadmap?
As part of the Roadmap, several tools have been developed to support climate risk assessment and resilience planning. One key output is the interactive GIS Vulnerability Web Map, which currently covers London and is set to expand to other major English cities. While it doesn’t offer building-level resolution, it uses a 5 km² hexagonal grid to illustrate the vulnerability of the built environment to overheating under future climate scenarios—providing a high-level view of urban exposure.
Another valuable resource is the Urban Heat Island Web Map, which visualises land surface temperatures across six UK cities—London, Manchester, Cardiff, Birmingham, Nottingham, and Glasgow. By comparing urban areas to surrounding temperatures, it highlights hotspots and temperature anomalies, offering insights into where urban heat risks are most pronounced.
To support project-level integration, the Roadmap also includes climate adaptation checklists aligned with the RIBA Plan of Work. These help project teams systematically address five key climate hazards and embed resilience measures into early-stage design and development briefs.
Conclusion: Resilience as a strategic advantage
The message is clear: climate risk is financial risk. Embedding climate resilience into core investment processes is not a future ideal—it is an immediate requirement.
Those who act early—by selecting the right tools, integrating adaptation with financial strategy, and supporting informed decision-making—will be best positioned to protect value, comply with regulation and meet stakeholder expectations.
How Verco Can Help
At Verco, we have a proven track record in enhancing assets’ climate resilience by applying industry best practices and actionable strategies informed by deep expertise. We continuously monitor external climate risks platform developments, test tools internally, and deliver insights grounded in best-practice science and regulation. We have a dedicated team of engineers who specialize in net zero audits and are well-equipped to assess sites and deliver costed adaptation solutions.
Stay tuned: We are undertaking a review of third-party climate risk assessment platforms and will publish our findings soon.
For further support, please contact us.
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