Index provider MSCI is strengthening its real estate climate analysis data offering through a partnership with Carbon Risk Real Estate Monitor (CRREM).

The partnership involves the integration of two CRREM decarbonisation pathways into MSCI’s Climate Value-at-Risk (VaR) model, increasing the number of transition risk pathways available for MSCI’s real estate users from 15 to 17.

MSCI’s real estate Climate VaR provides a forward-looking and return-based valuation assessment to measure climate-related risks for real estate assets in an investment portfolio.

MSCI said the partnership will enhance its “emission intensity data and decarbonisation pathways analysis” to enable real estate investors to better assess and manage transition risk.

MSCI, which provides investment decision support tools and services, counts asset managers, asset owners, banks, corporates, insurers and wealth managers as its clients.

“Investors are increasingly seeking to quantify and analyse climate risk exposures to enable them to make informed decisions about asset allocations and take steps to meaningfully tackle climate change, said Oliver Marchand, the global head of ESG and climate research and development at MSCI.

“Integrating data and methodology from CRREM further expands the information available to real estate investors using Climate VaR, so they can set climate goals, report on progress, measure risk over the long term and push towards net-zero.”

René Veerman, the head of real assets at MSCI, said the built environment contributes to almost 40% of global carbon emissions1 and with physical risk impacting property values, real estate investors arguably have the greatest imperative to act and significant opportunities to unlock.

“At the same time, many global investors have been increasing their allocations to real estate and other private assets, so there is a larger proportion of the investment world looking to understand the full extent of the financial risks, of which decarbonization pathways are an essential part.

“MSCI Real Assets helps our clients make climate-informed investment decisions, wherever they are on this journey,” Veerman said.

CRREM, supported by three institutional investors, including APG and PGGM, provides the real estate industry with transparent, science-based decarbonisation pathways aligned with the Paris Climate Goals of limiting global temperature rise to 2°C, with an ambition toward 1.5°C.

Sven Bienert at director at IIÖ and head of the CRREM initiative said: “By enhancing the understanding of how investors can manage both their climate impact and opportunities we’re hopeful we can help accelerate the transition to a net-zero economy.

“This step is also supporting further global industry alignment regarding decarbonization targets and standards for our industry.”

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