Moody’s Analytics Launches Climate Scores on its Commercial Real Estate Platform
October 12 2021 - 9:00AM
Business Wire
Moody’s Analytics is pleased to announce that proprietary
climate risk scores are now available on its leading commercial
real estate (CRE) analytics platform, REIS. Climate risk scores
quantify the exposure of commercial properties and geographies to
the physical impacts of climate change, providing investors,
brokers, and lenders a more holistic view of risk exposure.
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Source: Moody's
“This integration marks an important step in the evolution of
our property analytics platform into a full-service risk assessment
proposition for the CRE industry,” said Luis Amador, General
Manager of Moody’s Analytics CRE Solutions. “The ability to view
property level climate risk data alongside traditional performance
metrics offers a competitive advantage at every stage of the CRE
lifecycle, from loan or investment screening to ongoing evaluation
and reporting. It enables CRE industry participants to build
resiliency into their portfolios and engage in more forward-looking
decision-making.”
The CRE sector faces some of the most direct and tangible risks
from physical climate hazards. Acute physical risks, such as floods
and wildfires, can cause immediate and substantial damage to real
estate assets. Chronic physical risks, such as sea level rise or
heat stress, can significantly disrupt CRE markets from both supply
and demand perspectives.
Moreover, climate change exacerbates existing risks in several
ways including increasing restoration and remediation costs and
presenting uncertainty around the viability of a property or
market. Understanding the likelihood and severity of these risks
can help CRE market participants make better decisions over both
near and longer-term time horizons.
New research from Moody’s Analytics examines how climate change
is affecting real estate markets today and discusses implications
for the future. A case study of the Miami metropolitan area
demonstrates that developers are not yet integrating climate risks
into their assessments. The Miami metro saw one of the highest
percentage of assets exposed to flooding, yet it added the most
volume of new space to its inventory during 2015 to 2019 period.
While these results tend to contradict the basic idea that risk
should lead to lower development, more nuanced theory does support
the potential for less impact to be realized in areas which have
greater wealth and/or are amenity filled.
Moody’s climate risk scoring methodology utilizes best-in-class,
peer-reviewed models to measure both current and forward-looking
climate risks, providing a transparent and consistent standard for
monitoring the impacts of climate change on CRE performance
fundamentals.
This launch follows expansion of data coverage of the physical
risks posed by climate change with new sub-sovereign climate risk
scores introduced by Moody’s ESG Solutions. It coincides with the
ongoing “Moody’s on Climate” campaign that focuses on Moody’s
leadership in addressing the shared challenge of climate change
through our insights, solutions and corporate commitments.
About Moody’s Analytics
Moody’s Analytics provides financial intelligence and analytical
tools to help business leaders make better, faster decisions. Our
deep risk expertise, expansive information resources, and
innovative application of technology help our clients confidently
navigate an evolving marketplace. We are known for our
industry-leading and award-winning solutions, made up of research,
data, software, and professional services, assembled to deliver a
seamless customer experience. We create confidence in thousands of
organizations worldwide, with our commitment to excellence, open
mindset approach, and focus on meeting customer needs. For more
information about Moody’s Analytics, visit our website or connect
with us on Twitter or LinkedIn.
Moody's Analytics, Inc. is a subsidiary of Moody's Corporation
(NYSE: MCO). Moody’s Corporation reported revenue of $5.4 billion
in 2020, employs approximately 11,500 people worldwide and
maintains a presence in more than 40 countries.
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