DaCoClim-Data and collaboration preserves property values when Sweden adapts to climate change

The impact of climate change on property values can be extensive, a very large part of the value of properties can be lost.

In 2021, the National Board of Housing, Boverket showed in a literature study that property values can be affected by SEK 96-160 billion from flooding alone. Similar problems are described throughout Europe.

In a report from December 2023, the European Central Bank and the European Systemic Risk Board point out that banks are exposed to high risks linked to households, among others, and that future climate risks are underpriced and underfunded.At the same time, many of the risks that exist can be prevented or reduced with relatively small efforts if they are identified in time and there are incentives to do the right thing.

It is a matter of adapting the existing stock as well as ceasing to build in a way that is not resilient enough.

What can be sold today but can during the building´s technical life be affected and lose large parts of its value.Property owners, banks, insurance companies and many others need better knowledge of climate-related risks.

Climate change affects the financial sector both directly, which leads to value losses, and indirectly, through higher risk and changes in regulations.

EU regulations that recently entered into force such as sustainability accounting rules and classifications of sustainable investments have a strong impact on the industry´s need for data at the individual property level.

In response to new regulations and to raise awareness of the risks that climate change poses to our building stock, pressure has rapidly built up for the need to act, while the need for synergy is great.In response to new regulations and to increase awareness of the risks that climate change poses to our building stock, RISE conducted a feasibility study, funded by Vinnova, in 2021-2022 on a standardized assessment of climate risks in real estate called the Climate Resilience Certificates (CRC).

The idea of CRC is to eventually develop a model with classification of buildings.

For CRC, the feasibility study showed that there was a need for a screening tool as a first step towards full implementation. For this to be possible, currently not yet compiled data on Sweden´s buildings is needed.

This project lays the foundation for this screening tool, but regardless of whether a system with CRC is introduced or not, the project also lays the foundation for increased digitalization, new information structures and information flows to find cost-effective measures for the existing and future building stock to be adapted.The overall aim of the project is to preserve the value of the properties in Sweden in a changing climate.

The financial and insurance sectors have an important role to play in climate change adaptation.

By integrating climate change adaptation into its external financing, insurance and investment decisions, the sector can, and must, contribute to increasing the resilience of the economy and reducing the risks of financial instability.

Through its influence on companies and projects, as well as considering growing regulatory requirements and business realities, the sector will need to strongly influence how they adapt to climate change.

Specifically, it can be about advising customers on concrete measures that would make a difference to their property and showing what it can lead to in the form of lower interest rates and insurance premiums.

For this to be implemented in a good way, extensive work is needed for collaborations in data collection and standardization of assessments.