The Task Force for Climate-related Financial Disclosures (TCFD), launched in 2017, encourages businesses to build resilience to the possible outcomes of climate change. We’re committed to acting on the recommendations of TCFD.
Landsec considers climate change a principal risk and material issue. In line with the Task Force on Climate-related Financial Disclosures’ (TCFD) recommendations, since 2017 we’ve committed to assessing and reporting on material climate change risks across our portfolio, ensuring we have the appropriate strategy and mitigation plan in place.
This year, we have worked again with Willis Towers Watson in assessing and quantifying climate-related risks. This study has provided us with an updated view of these at portfolio and asset level, and allowed us to understand the potential financial impact of transition risks, such as policy and legislation changes and shifts in market preferences. This is informing our approach to managing climate risks across our portfolio, including new developments. Through our net zero carbon strategy, we’re managing the transition risks, supporting our transition to a low carbon world. This strategy is helping ensure we remain resilient and relevant in the long term.
What we've achieved
Our assets should support the changing needs of customers, which means investing in low-carbon and energy efficient buildings and technology. New assets must move from dependence on gas towards all-electric solutions like air source heat pumps. We’ve begun this transition within our developments, scaling back fossil fuel-dependent boilers in favour of electric heating and cooling. This means our assets will be powered by cleaner energy as the volume of renewable energy resources on the grid increases.
Part of becoming more resilient is being aware of the physical risks of climate change, like flooding, sea level rise and overheating. As the climate becomes hotter and wetter, we need to be sure our assets still deliver the same quality of experience to our customers. At present the percentage of our portfolio at high risk of extreme weather in the lead up to 2030 is 1.1% when measured by value. As climate change will gradually increase the level of risk over time, it’s important we continually reassess the risks.
We continue evolving our strategy to address climate-related risks and opportunities. As part of our approach to manage transition risks, in November 2019 we announced our commitment to becoming a net zero carbon business by 2030. We increased the ambition level of our science-based target, aligning it with a 1.5°C scenario. In addition to reducing our operational emissions, by improving the energy efficiency of our assets, we’re looking to increase investments in renewables, such as corporate PPAs, managing the future risk of higher energy costs. We’re also implementing an internal shadow carbon price, anticipating a potential carbon price in the future, to inform our decision-making process. Furthermore, we’re reducing carbon emissions across our construction activities by setting embodied carbon intensity and reduction targets for each of our developments. Finally, we’ll offset any remaining carbon emissions through carefully selected projects which actively take carbon out of the atmosphere.
We mitigate climate risks through physical measures, insurance and business continuity planning. At present, the level of residual risk to our assets is low up to 2030. In our development pipeline, we’re designing and constructing high-quality buildings and spaces capable of delivering operational resilience over their lifetime, considering how the UK’s climate will change in the coming decades. We’re confident our focus on energy transition and mitigating physical risks means our business will continue to be resilient to the impact of climate change.
Resilience is becoming a major consideration for businesses with impact on insurance, valuation and rents already starting to show in many countries. Landsec are leading the way by committing to protecting their properties and customers from the impacts of climate change as these risks become more apparent."
Partner, Catastrophe and Climate Risk Management, Willis Towers Watson