Dutch regulator AFM: Climate risks insufficiently priced in; sustainability transition slow

The societal and political desire to accelerate the sustainability transition in financial markets is growing. As a result of climate change, extreme weather conditions such as heavy rainfall and prolonged droughts will occur more frequently. This leads to an increasing risk of floods and damage to the foundations of real estate. These risks potentially have significant financial consequences for property owners in the form of potential damage costs and reduction in property values, according to the Dutch Authority for the Financial Markets (AFM).

At the same time, owners who do invest in ESG-proof real estate see their efforts insufficiently rewarded in the valuation of their property.

In the recent publication ‘Inprijzen van klimaatrisico’s op de woningmarkt’, the AFM highlights the consequences of insufficiently pricing in climate risks and offers several possible solutions. The publication specifically targets the housing market, but is illustrative for every type of real estate.

Blue Module has developed the BasicScan, which generates an ESG baseline measurement for every type of real estate, including residential properties, and includes climate risks. In doing so, we use the brand new FCAB methodology, developed by the DGBC (Dutch Green Building Council).