November 7, 2022
The leadership of Canada’s commercial real estate sector must do more to manage risks related to climate change and achieve net-zero
VANCOUVER, 7 November 2022 – The Canada Climate Law Initiative and Real Property Association of Canada (REALPAC) launch a new report today to help boards, management, and professionals in the Canadian commercial real estate sector understand and deal with the increasing implications of climate change and the net-zero transition.
A Guide to Effective Climate Governance in the Canadian Commercial Real Estate Sector: Building for the Net-Zero Future offers guidance to help boards, management and professionals within the commercial real estate industry. Authors Temitope Tunbi Onifade and Helen Tooze, researchers at the Canada Climate Law Initiative, provide six practical steps for effective climate governance. The guide offers insights into: governance structure, board oversight, risk assessment and management, disclosure, setting targets and metrics, and designing strategy.
The Canadian commercial real estate sector faces systemic risks from climate change and will likely be a sector that experiences significant, direct adverse impacts. The losses resulting from extreme weather events in Canada have increased from an average of $405 million annually between 1983 and 2008 to $1.8 billion annually between 2009 and 2017, reaching $2.1 billion in 2021 in insured damage and indicating a rising pattern.
The global real estate sector is already taking steps to address these challenges, but Canada’s commercial real estate industry could do more. For example, 158 real estate companies globally have set targets for emissions reduction that align with the science-based targets initiative (SBTi), 68 of those have committed to meet 1.5°C, with 27 companies committed to a 2°C target and 63 companies committed overall. Yet, in Canada, only five companies have made similar commitments.
As boards, executives and professionals effectively manage climate risks, they should also capitalize on new opportunities. These opportunities will help them cut costs, become more competitive, and be positioned to make money while enhancing their reputation, protecting their business and contributing to Canada’s net-zero targets.
“As climate risks become systemic, the commercial real estate industry should deploy risk governance practices to effectively deal with them. Doing so will also open doors to new opportunities. For example, the Government of Canada has allocated over $10 billion since 2016 to support the decarbonization of buildings and homes and to provide incentives for energy-efficient retrofits, and is taking the next step in pursuit of net-zero emissions targets under the 2022 budget. Real estate entities should position themselves to benefit from these incentives and other emerging opportunities.” -Temitope Tunbi Onifade, Researcher at the Canada Climate Law Initiative and Lecturer at the University of Bristol Law School
“For over a decade the commercial real estate industry has been focused on “greening” buildings, increasing efficiency, and managing the physical risks from extreme weather events – but there is a need to address the knowledge gaps at the investor and board level, in order to address both the compounding physical climate risks and transition risks. This guide sets out a viable risk governance model, and is an exceptional crash course on the key issues that are becoming the legal duty of boards and management to understand.” -Neil Pegram, Consulting Advisor – ESG in Real Assets
Download the guide here
About the Canada Climate Law Initiative
The Canada Climate Law Initiative (CCLI) provides businesses and regulators with climate governance guidance so they can make informed decisions toward a net-zero economy. Powered by the nation’s top expertise, we engage with boards of directors and trustees to ensure businesses understand their legal duties with respect to climate change. Our legal research allows us to stay one step ahead in a rapidly transforming policy landscape.
CCLI is supported financially by family foundations, and is established at the University of British Columbia Peter A. Allard School of Law and Osgoode Hall Law School, York University.
About the Real Property Association of Canada (REALPAC)
Founded in 1970, REALPAC is the national leadership association dedicated to advancing the long-term vitality of Canada’s real property sector. Our 130+ member companies include publicly traded real estate companies, real estate investment trusts (REITs), pension funds, private companies, fund managers, asset managers, developers, government real estate agencies, lenders, banks, life insurance companies, investment dealers, brokerages, consultants/data providers, large general contractors, and international members. Our members represent all asset classes in Canada – office, retail, industrial, apartment, hotel, seniors residential – from coast, to coast, to coast.