Landsec has always considered climate change as a risk to the business but did not fully understand how this risk would change over time and under different climate change scenarios. To better understand these risk profiles, Landsec partnered with Willis Towers Watson’s Strategic Risk Consulting team to model the potential environmental and economic impacts to the business under different climate change projections. The effects of climate change were modelled based on both a 2 degree and 4 degree average global temperature increase. These effects were then overlaid against UK weather and natural catastrophe modelling using Risk Management Solutions (RMS) software. The model outputs were then used to calculate economic risk on a property by property basis, in conjunction with financial and insurance data. The project used a collaborative approach between Willis Towers Watson and Landsec’s Sustainability, Finance and Insurance teams.
An initial barrier to the project was the collection of all the required data points needed to feed into the modelling. Property specific information needed to be collated from numerous teams with some data points difficult to access or deemed commercially sensitive. These barriers were overcome by engaging internal stakeholders and fully explaining to them the project, the requirements of TCFD and the benefits of understanding and communicating the company’s climate risk.
It was also important to engage the Investor Relations and Corporate Communications teams to ensure the response to the TCFD guidance could be effectively integrated into annual corporate reporting. A summary of Landsec’s climate related financial disclosure can be found within the 2018 annual report with a more detailed response available in the company’s 2018 Sustainability peformance, methodology and data report. Both reports can be found here www.landsec.com.
Following the completion of the project, the findings have been presented at numerous team meetings around the company with feedback on how the outputs can be used by different departments. The discussions have been extremely interesting and now the whole business has a better understanding of how climate change will affect their teams and how their strategies can be developed to minimise the risks and maximise the opportunities.