27.11.2022
One of the latest printed editions of the Economist magazine had the headline “Say Goodbye to 1.5°C”, indicating the goal of limiting the increase in the average temperature of the planet to 1.5°C. The article provides an extensive analysis of the reasons for the failure of climate change policy.
The magazine was released a few days before the UN climate change conference COP27.
A few days later, COP27 decided to create a special fund to financially support vulnerable countries that are expected to be hit by weather-related natural disasters – the “Loss and Damage Fund”, as they called it.
The creation of the Fund is an indirect recognition that the goal of curbing climate change will not be achieved.
In fact, according to studies presented during the summit, with current data, temperatures will rise by at least 2.5 degrees Celsius by the end of the century.
Sea levels in the Mediterranean rose by 7 cm between 2000 and 2018, according to the UK National Oceanographic Centre.
As you would expect, in Cyprus, many developed areas are at sea level or very close, especially in the eastern part of the island.
Natural events pose a significant risk to financial institutions, especially long-term banks and insurance companies, whose activities are directly related to losses from various events, such as floods and forest fires.
It is clear that extreme physical events affect the value of property. As mentioned earlier, if today a project is very close to the coast and at sea level, in a few years it may… start to float!
Landslide
Let’s say a piece of land is in a landslide area or in an area where the ground subsides, such as the “Limnes” (lake) area in Pissouri. In this case, its value will obviously suffer dramatically.
Any change in the value of real estate directly affects the financial institution that financed its construction / purchase, or the insurance company that offered coverage.
In addition, in an era when ESG (environmental, social, governance) criteria are shaping a new reality, the energy efficiency of each facility affects its value.
If a house or other building does not have high energy efficiency, such as thermal insulation, photovoltaics, etc., its attractiveness and value are reduced. This applies to both properties targeted at retail buyers and institutional investors.
Ask Wire collects data on all phenomena that can affect the value of real estate. Whether it is acute (one-off) risks such as a wildfire or earthquake, or chronic risks that develop over time, such as the frequency of storms or floods due to climate change.
Data is even collected about the condition of the ground or the correct slope that a photovoltaic needs to have in order to be more efficient.
All of this dynamic data is combined with satellite data to create a comprehensive package of information that financial institutions can use in a variety of ways. Or to adjust your pricing policy and prevent surprises. Or to create new innovative products that meet the needs of our time. Even to meet ever-increasing ESG regulatory requirements.
Cyprus alone can do little to prevent climate change. Making and implementing decisions that at least predict the impacts and impacts of potential acute and climate-related risks are essential to help companies and individuals mitigate them.
Pavlos Loizou, CEO of WiRE FS
