To help commercial real estate (CRE) owners and investors prioritize climate-risk action, the BMO Climate Institute, in partnership with ClimateFirst Building Solutions Inc. and the Investment Management Corporation of Ontario (IMCO), conducted a detailed analysis of representative assets across key geographies in North America. The study integrates climate science, engineering insight, and financial modeling to assess how physical climate risks translate into real, asset-level costs over time.
This first-of-its-kind analysis demonstrates that while climate risks cannot be eliminated, their financial impacts can be meaningfully reduced through informed, proactive investment. By converting climate risk and adaptation strategies into monetary terms, the study enables more rigorous capital planning, supports risk-adjusted decision-making, and quantifies the value of avoided losses. In doing so, it reframes resilience as a measurable and investable strategy—one that not only mitigates downside risk but also protects and enhances long-term asset value.
Building on the initial findings, the study has been expanded through a Canadian addendum that incorporates additional assets and climate considerations specific to key Canadian markets, further strengthening its relevance for institutional investors operating across North America.
Executive Summary
Climate-related disasters are taking a growing financial toll on real estate assets in North America. For the commercial real estate (CRE) sector, this pervasiveness has introduced a critical challenge: how to systematically prioritize action. Owners and investors now have data to identify the hazards facing their portfolios, but when many assets face some level of physical climate risk, prioritization often feels overwhelming – leading to inaction or suboptimal action.
Recognizing the significance of this challenge, the BMO Climate Institute, in partnership with ClimateFirst Building Solutions Inc. (ClimateFirst) and Investment Management Corporation of Ontario (IMCO), conducted an analysis with the following goals:
- Quantify the magnitude of potential financial loss for a representative multi-unit residential building (MURB) in different geographies to unlock the prioritization of assets at risk.
- Demonstrate the potential financial impact of investing in resiliency measures at the building level.
Our analysis finds that:
- Building-level risk quantification can provide a clearer view of potential financial losses and downtime under future climate conditions and pinpoints which assets require immediate adaptation investment.
- When these priority risks are met with appropriate adaptation strategies, the financial case is compelling: avoided losses can significantly outweigh the costs. That is to say: resiliency is not just sound risk management, but a value-preserving investment strategy.
This case study demonstrates that while climate risks cannot be eliminated, their financial impacts can be materially reduced. By equipping decision-makers with transparent, monetary measures of risk and avoided loss, assets can be prioritized for investment and the business case for action can be more clearly demonstrated – making resiliency not just an aspiration but an investable strategy that preserves building value while creating long-term advantage.