Method to Assess Climate Change Risks in Buildings IAIA Conference 2017 Method to Assess Climate Change Risks in Buildings Assessing climate change and disaster impact on urban area (II) (114b) 13:30 – 15:00 Andrew Murray

Presentation format Background Introduction Methodology Assessment format & design Assessment process Scoring methodology Learning points

Background Andy Murray – Sustainability Consultant at Ramboll Environ Based in Carbon & Energy Team, located in London, UK Areas of specialisation New Construction & Planning Sustainability Appraisals Risk Assessments Corporate Reporting BREEAM Assessor Content slide

Background Ramboll Environ work with several Property Owners, Managers and Developers. Climate change poses significant risks to existing property New constructions subject to rigours standards and assessment Climate risks are considered and controlled from the outset Building Reg’s Assessment Methods Planning Controls & Conditions Content slide

Background Property timeframes are multi- decadal Lack of assessment methods/tools for existing property Less incentive for existing properties to assess and control future risks Content slide

introduction Number of Clients requested an audit of existing buildings to understand: What potential risks Impact of these risks Level of exposure How to control future risks This presentation will describe the process undertaken in creating the assessment, the outputs and lessons learned.

introduction In response Ramboll Environ developed: An undemanding assessment methodology, to quantify the likelihood and impact of potential climate change and sustainability risks; assess current mitigation measures and produce a net risk value for a number of key issues

Methodology Created a set of Key Risk Issues through: Output: Description No. of sub- issues Energy Efficiency Risk of higher fuel costs, energy security issues, associated negative environmental externalities 6 Water Efficiency Increasing demands on water, changes in precipitation patterns and additional environmental protection legislation may lead to reduced availability (with potential restrictions on use), higher water costs and greater environmental impact from extraction and waste water treatment. 7 GHG Emissions Associated extraneous impacts from emissions; likely increases in legislative controls, reporting requirements and possibly stricter emission requirements; impact from reputational expectations and damages; greater consideration of GHG emissions when accessing finance and valuation of an asset 5 Building Safety & Materials Structural integrity of asset, potential for increased maintenance costs, loss of business continuity and income from major disruptions, potential for whole building to be unsuitable for occupation Transportation Increasing fuel costs, pollution emission controls and congestion could affect ability of staff and products to get to and from the asset Contamination Site and building has potential to cause environmental damage or effect human health, with associated business liabilities and potential risks of legislative and financial implications if site causes negative environmental/human health effects. 4 Natural Hazards Direct risk of natural hazards impacting on the asset and its operation; risk of increasing difficulty in obtaining finance, greater insurance costs, lower rental income potential, disruption to business continuity. Climate Change Unknown consequences of changing climate on asset physical structure, access to resources, impact on business operations. Greater legislative and reporting requirements with financial and legal consequences. Socio-economic Assets and organisations operate within the wider social and economic environment, both influencing and being influenced by it. The socio-economic environment can offer potential opportunities and risks. 9 Regulatory Risk from legal impacts, reputational losses, additional charges, costs and fines. 3 H&S and Well Being Risks of legislative non-compliance, lower rates of productivity, financial value of an asset and exposure to litigation. Other Risk of changing pattern of engagement from internal stakeholders. 1 Methodology Created a set of Key Risk Issues through: Literature review existing methodologies National risk factors Global and local Reoccurring themes/issues were noted Output: 12 key issues identified Number of sub-issues each

Building Safety & Materials Transportation Contamination Issue Description No. of sub- issues Energy Efficiency Risk of higher fuel costs, energy security issues, associated negative environmental externalities 6 Water Efficiency Increasing demands on water, changes in precipitation patterns and additional environmental protection legislation may lead to reduced availability (with potential restrictions on use), higher water costs and greater environmental impact from extraction and waste water treatment. 7 GHG Emissions Associated extraneous impacts from emissions; likely increases in legislative controls, reporting requirements and possibly stricter emission requirements; impact from reputational expectations and damages; greater consideration of GHG emissions when accessing finance and valuation of an asset 5 Building Safety & Materials Structural integrity of asset, potential for increased maintenance costs, loss of business continuity and income from major disruptions, potential for whole building to be unsuitable for occupation Transportation Increasing fuel costs, pollution emission controls and congestion could affect ability of staff and products to get to and from the asset Contamination Site and building has potential to cause environmental damage or effect human health, with associated business liabilities and potential risks of legislative and financial implications if site causes negative environmental/human health effects. 4 Natural Hazards Direct risk of natural hazards impacting on the asset and its operation; risk of increasing difficulty in obtaining finance, greater insurance costs, lower rental income potential, disruption to business continuity. Climate Change Unknown consequences of changing climate on asset physical structure, access to resources, impact on business operations. Greater legislative and reporting requirements with financial and legal consequences. Socio-economic Assets and organisations operate within the wider social and economic environment, both influencing and being influenced by it. The socio-economic environment can offer potential opportunities and risks. 9 Regulatory Risk from legal impacts, reputational losses, additional charges, costs and fines. 3 H&S and Well Being Risks of legislative non-compliance, lower rates of productivity, financial value of an asset and exposure to litigation. Other Risk of changing pattern of engagement from internal stakeholders. 1

Assessment Design & Format Single Excel workbook, “A4” sized, easily printed Sections: Introduction text – brief outline of the assessment; site information; audit details, propose and approach. Results summary – Gross risk, Net risk and normalised risk output for each assessment issue with recommendations (key recommendations highlighted); Assessment issues overview – description of the 12 Key Risk Issue groups; Method – description of key terms, assessment instructions, recommended prior reading and guidance; Individual assessment and scores – specific assessment tab for each of the 12 Key Risk Issues; Graphs – visual representation summary of the risk assessment scores including Gross and Net risk; and, Data tab –to store assessment data and other quantifiable metrics for future reference

Assessment Design & Format For each sub-issue there is: Evidence criteria Description notes Mitigation actions Auditor comments

Assessment Process Site specific Sub-issue list created Information request & review Site audit Results collated and reviewed Recommendations for mitigation Sharing of results with stakeholders

Results collated and reviewed Assessment Process Site specific Sub-issue list created Information request & review Site audit Results collated and reviewed Recommendations for mitigation Sharing of results with stakeholders

Scoring Methodology – per sub-issue Net Risk – Gross risk modified by Current Control effectiveness

Scoring Methodology – per sub-issue Net Risk – Gross risk modified by Current Control effectiveness Gross Risk - sum of likelihood score and impact factors: Likelihood/Exposure: how likely the risk will occur Scored: 1-5 (unlikely, possible, probable, very likely, certain) Impact: magnitude of impact from the sub-issue Scored: 1 to 5 (insignificant, moderate, significant, major, extreme) Score Likelihood Impact 1 Unlikely Insignificant 2 Possible Moderate 3 Probable Significant 4 Very likely Major 5 Certain Extreme

Scoring Methodology – per sub-issue Net Risk – Gross risk modified by Current Control effectiveness Gross Risk - sum of likelihood score and impact factors: Likelihood/Exposure: how likely the risk will occur Scored: 1-5 (unlikely, possible, probable, very likely, certain) Impact: magnitude of impact from the sub-issue Scored: 1 to 5 (insignificant, moderate, significant, major, extreme) Current Control - if there is a control mechanism in place, deemed to reduce the risk. Scored as Full, Partial, or No control

Recommendations for mitigation Sharing of results with stakeholders Assessment Process Site specific Sub-issue list created Information request & review Site audit Results collated and reviewed Recommendations for mitigation Sharing of results with stakeholders

Outputs – Summary Table Each issue category has: Gross, Current and Normalised Risk scores Recommended mitigation measures Most urgent 10 measures highlighted

Outputs - Visual representation Gross and Current displayed visually Shows highest risk areas and level of current control

Learning points Although simple and easy to use, the assessor needs to be suitably knowledgeable 1-5 scale and 3 levels of current control maintains simplicity without too great a loss of specificity Issues of subjectivity between assessors, need for internal checks and controls Results useful as an initial assessment of overall risk but further due diligence should be undertaken prior to financial decisions

Advantages of undertaking assessment Measure and improve business resilience; Investment assurance in long term viability; Improved occupier satisfaction and/or productivity of staff; Recognition in assessment frameworks - Global Real Estate Sustainability Benchmark (GRESB), European Public Real Estate Association (EPRA); Provide competitive advantage; Lower financing costs, insurance premiums (financial institutions are beginning to offer favourable rates for buildings deemed as lower risk); Increased retail or lease value; Reputational advantage; Stay ahead of new legislation, issues and corporate goals; Provide a focused approach to risk mitigation; Track progress of risk reduction.

Questions Contact details Address - Ramboll Environ, Artillery House, 11-19 Artillery Row, London, SW1P 1RT, UK Tel - +44 20 7808 1473 Email - amurray@ramboll.com