Climate change and buildings: why businesses can benefit by building resilience
The summer of 2022 once again highlighted how climate change will continue to affect the way we live and work. As workers sweltered in the heat and businesses shut due to flash floods, we can no longer avoid the questions: how prepared are our buildings for what’s to come; and what can businesses do about it?
What is the nature of the problem?
Our building stock is not prepared for climate change
Over half of the commercial properties across England and Wales were built before 1970, long before climate change was considered to be a threat to society let alone buildings. The threat of climate change to our building stock is vast: 42 % of London firms are at risk of climate-fuelled flash floods. Given that 80% of the buildings that will exist in 2050 have already been built, this creates increasing difficulties for property owners that have not put in place measures to adapt to climate change.
Worker health, wellbeing, and productivity is at risk
Climate change will present significant issues for workers’ wellbeing and effectiveness. For example, workers lacking proper ventilation will face significant distress through temperature extremes, with clear consequences for productivity. This is echoed by the UK’s Climate Change Committee who say that increasingly hot summers could lead to a trebling of health and productivity impacts if we do not adapt adequately. Another study suggested that an average business could lose 1% of their total annual sales during periods of extreme heat. This is especially worrisome given that a “hot” summer we experience today is expected to be an average summer in 30 years’ time.
Climate change will be costly for building owners
The impacts of climate change will have a significant effect on the value of buildings. For example, buildings exposed to high climate risk may lose business – with obvious consequences for cash flow – through reduced demand as tenants look to occupy buildings that are more climate resilient. This will also bring reductions in property value, making them less attractive for onward buyers.
Property owners with buildings exposed to climate hazards will likely see increases in recovery and reconstruction costs with more severe weather events. If owners fail to build in climate resilience measures, the cost of repair may become too high to bear, leading to bankruptcy, insolvency and credit defaults.
An additional worry comes from the chronic under-insurance at many UK buildings, leaving owners vulnerable to unrecoverable economic losses related to climate impacts. As of 2020, the gap between anticipated climate-related losses and levels of insurance in place reached an all-time high of around £1.2 trillion, meaning that around 76% of such anticipated losses are currently uninsured. It should be no surprise, then, that there is an emerging consensus that insurance premiums for buildings are likely to increase to reflect higher climate risks.
What can businesses do?
Understand that there is a strong business case for developing climate resilience
Firstly, the cost of future losses compared to the cost of investing in resilience measures today makes increasingly good financial sense, as the scale of future losses continues to build. Investing in resilience today, such as proper ventilation, can reduce these losses in years to come. Although it can be difficult to measure future and unexpected losses accurately, businesses should feel confident to invest today: the evidence is compelling that investing in climate resilience produces benefits 2 to 10 times greater than the costs incurred.
Businesses can also reduce insurance costs by building a strong track record of climate resilience as well as cash in on increased property and land value in the future. This will entice investors looking for more long-term and secure investments.
Action can also produce social and health co-benefits. A rooftop garden, for instance, can act as sustainable drainage in the event of extreme rainfall, while also providing a relaxing place to recharge – an amenity that supports the wellbeing, satisfaction and productivity of a building’s occupants.
Plan properly to prevent poor performance
Planning is crucial to ensure buildings are fit for a changing climate. Businesses should start by identifying the climate risks and vulnerabilities affecting their buildings along an assessment of their severity and likelihood. This will highlight the most important risks and priorities for action, enabling the fastest and most effective near-term risk reduction. Developing climate resiliency in buildings may also provide opportunities, such as capitalising on improved consumer sentiment or strengthening collaboration with local planners to improve measures.
The planning process should secure senior management buy-in as money will need to be spent for capital and operational investments. In so doing, management will be able to oversee risks and opportunities and make strategic decisions affecting the business more effectively.
Identify and operationalise solutions
For existing buildings, the clearest practical solutions will involve retrofitting, i.e. adding new features and upgrading existing ones. Such measures include adding shading and appropriate ventilation to cool buildings during heat waves or investing in flood barriers in a flood risk zone. Energy efficiency measures such as loft and external wall insulation, draught-proofing doors and triple-glazing windows all help reduce temperature extremes.
For new developments, it is essential that climate resilience is integrated at the planning and design stage to mitigate against future risks. This will consider factors such as location, building layout and structure. Property developers can also prioritise sourcing materials that are climate-resilient such as breathable fabrics, which can reduce building temperature.
Noted designer Bruno Munari once said: “an object should be judged by whether it has form consistent with its use”. The summer of 2022 was a reality check for businesses to really judge whether the form of their buildings protects against the risks they are exposed to as well as ensure they remain suitable for our use. We know that the effects of climate change will continue to intensify, so acting now with resilience gives businesses the best chance to thrive in our changing world.
Sancroft works together with various businesses including property developers and managers to tackle their most significant sustainability and climate-related issues. If you would like to discuss more and find out how we can help you, please contact Ilkka.Saarinen@Sancroft.com or Judy.Kuszewski@Sancroft.com