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The Climate Risk Gap in Real Estate Due Diligence — And How to Fix It

Leading investors are including climate hazard and CVaR analysis in their pre-acquisition reviews. Here are the reasons why, the tools they use, and how they apply this intelligence for more informed decision making.

Leading investors are including climate hazard and CVaR analysis in their pre-acquisition reviews. Dive into the why, what and how to gain an advantage with more informed decision making.

Why: Physical Climate Risk Must Be Part of Every Due Diligence Process

  1. Extreme weather is the new norm. Nearly every location across Canada and globally is now exposed to intensifying climate hazards — from floods and wildfires to heatwaves and hurricanes.
  2. These exposures impact valuation. Climate-driven failures in key building systems lead to unplanned capital costs, insurance challenges, and reputational risk. Ignoring them can result in significant financial losses.
  3. Risk-aware buyers make smarter deals. Physical climate risk management is no longer optional — it’s prudent. Institutional investors, lenders, and insurers increasingly expect it as part of best-practice due diligence.

What: Actionable Insights to Support Go / No-Go & Pricing Decisions

  1. Insurance gaps flagged early. For assets with elevated flood, wind, or wildfire risk, validate that insurance is available and included in your proforma.
  2. Systems at risk identified. Identify which components — roofs, HVAC, windows, electrical —face the highest failure risk, and quantify the potential capital costs.
  3. Integrate into investment decisions. Use this data to adjust offer pricing, negotiate terms, or initiate deeper engineering reviews — turning climate risk into a managed variable, not a surprise liability.

How: ClimateFirst Makes Climate Risk Simple and Scalable in Due Diligence

  • Screen for risk in 24 hours. Submit a property address to receive a Rapid Climate Risk Screen that scores exposure to key hazards like flood, wind, fire, heat, and more.
  • Quantify financial impact in 48 hours. Upload the Building Condition Assessment (BCA) and receive a Climate Value at Risk (CVaR) report — a financial estimate of risk by system and hazard.

Ready to simplify climate risk in your next acquisition? ClimateFirst delivers the data you need — fast, credible, and integrated into your existing workflow.

Reach out today to get started!