Vulnerability assessment for climate change risks
From January 2020 we started our assessment on the physical risks and vulnerabilities our properties face as a result of climate change. This is crucial in order to adapt to different climate scenarios on time and start our transition into resilient properties.
Our climate change risk assessment consists of three phases:
Physical risks
This stage consisted of identifying transitional and physical risks; the latter were analyzed based on temperature and precipitation variations in two periods and Representative Concentration Pathways (RCP 4.5 and 8.5) as well as the current vulnerability of 534 properties to physical risks related to the climate, thus obtaining the following results:
| 2015 - 2039 | 2045 - 2069 | |||
|---|---|---|---|---|
| RCP 4.5 | RCP 8.5 | RCP 4.5 | RCP 8.5 | |
| Heat waves | 224 | 233 | 250 | 257 |
| Tropical Cyclones | 79 | |||
| Floods | 144 | 366 | 137 | 151 |
| Droughts | 406 | 379 | 405 | 412 |
| Sea level rise | 36 | |||
Transition risks towards a low emission economy
Following the recommendations of the Task Force on Climate Related Financial Disclosure (TCFD), the transition risks towards a low carbon economy were identified under the scenario given by the “Deep Decarbonization Pathways Project” (DDPP) whose approach consists of limiting global temperature rise below 2° C. This scenario shows the deep decarbonization routes to be followed by the 16 countries that represent 74% of global GHG emissions, including Mexico, as well as the necessary changes in infrastructure to achieve decarbonization. In this sense, the main risks in this scenario are:
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Changes in national regulations regarding GHG emissions reporting.
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Mandates on and regulation of existing products and services.
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Enhancing obligations on emissions reporting.
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Pricing GHG emissions.
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Need to reduce energy demand and energy intensity at a national level.
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Reduce the use of energy from fossil sources.
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Increase in the number of electric cars nationwide.
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Unpredictable changes in consumption patterns from our tenants and visitors.
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Demand of low carbon infrastructure.
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Unsuccessful investments in new technologies.
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Higher transition costs to lower emissions technologies.
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Higher costs in products, technologies and services.
Physical risks
Based on the identification of physical risks, the largest number of vulnerable properties are located in a scenario in which Greenhouse Gas emissions continue to increase and the vast majority of organizations maintain a “business as usual” approach.
This scenario brings with it implications for the operations and infrastructure of our properties, therefore, the physical and operational impacts were identified based on the key elements to maintain the operation of our properties, such as an adequate infrastructure and the continuous supply of water and energy. In this sense:
| Physical and operational impacts | Financial impacts | |
|---|---|---|
| Heat waves |
In the long term, around 257 properties could present:
|
1,272,367,413.47 |
| Tropical Cyclones |
It is estimated that around 79 buildings would be exposed to:
|
1,325,255,678.15 |
| Floods |
En el mediano plazo aproximadamente 363 propiedades podrían estar sujetas a:
|
662,627,839.07 |
| Droughts |
In the long term, around 412 properties would be exposed to:
|
4,365,930,722.80 |
| Sea level rise |
It is estimated that 34 properties could present:
|
10,913,560,671.30 |
Transition Risks Towards A Low Emission Economy
The financial implications and impacts associated with the transition risks were determined based on the 3 pillars of decarbonization of the DDPP scenario, energy conservation and efficiency, decarbonization of electricity, and switching energy end-uses to lower-carbon energies. Based on this, the implications associated to transition risks are:
| Implications | Financial impacts | |
|---|---|---|
| Changes in national regulations regarding GHG emissions reporting |
|
In process |
| Mandates on and regulation of existing products and services. |
|
|
| Enhancing obligations on emissions reporting. |
|
|
| Pricing GHG emissions. |
|
|
| Need to reduce energy demand and energy intensity at a national level. |
|
|
| Reduce the use of energy from fossil sources. |
|
|
| Increase in the number of electric cars nationwide. |
|
|
| Unpredictable changes in consumption patterns from our tenants and visitors. |
|
|
| Demand for low carbon infrastructure |
|
|
| Unsuccessful investments in new technologies. |
|
|
| Higher transition costs to lower emissions technologies. |
|
|
| Higher costs in products, technologies and services. |
|
| Heat waves |
|
|---|---|
| Tropical Cyclones |
|
| Floods |
|
| Droughts |
|
| Sea level rise |
|
| Changes in national regulations regarding GHG emissions reporting |
|
|---|---|
| Need to reduce energy demand and energy intensity at a national level |
|
| Reduce the use of energy from fossil sources |
|
| Increase in the number of electric cars nationwide |
|
| Demand for low carbon infrastructure |
|