Why climate action is needed to make cities attractive to investors
Two new global research studies reinforce the message that cities need to manage increasing climate risks – from extreme heat to flooding – if they want to be competitive in the future
Cities will need to pay closer attention to managing climate risks if they want to attract new investment. That is the key message behind two different research tools launched by sustainable development consultancy Arup and global real estate firm Cushman & Wakefield.
According to Arup’s new City Competitiveness Redefined Tracker, cities aiming to bring in more inward investment in the future must think beyond traditional indicators like economic growth and transport infrastructure. Instead, they need to focus far more on issues such as climate action and demographic shifts.
Arup’s Tracker measures 63 cities against 37 future success indicators – with around a quarter focused on climate action. These indicators cover four key assessment areas for city competitiveness: investor attractiveness; assets and infrastructure; liveability and lovability; and urban management and governance.
Eight different hazards
Cushman & Wakefield’s Climate Risk: Global Cities Outlook report directly examines the readiness of 100 cities around the world to withstand the hazards of eight different effects of climate change: wind, flood, precipitation, hail, heat, cold, wildfire and drought. It presents a choice between adaptation strategies that anticipate climate risks, and mitigation measures focused on reducing greenhouse gas emissions.
The Cushman & Wakefield report observes that ‘It is well known that cities face varying levels of climate risk, with some cities at low risk for certain hazards. However, less understood is the type and, more so, the level of hazard exposure when risk rises.’ Climate risks are described in terms of financial impact such as direct property damage, increased insurance premiums, loss of productivity, loss of equipment, impact of future asset value, difficulties in selling or leasing, and impact on employees and customers.
Cushman & Wakefield study tracks the increasing threat of climate change that all cities face, whether at low or high levels of exposure. Diagram courtesy of Cushman & Wakefield
Cities facing the challenge
Which cities are making most headway in facing the challenge of climate change?
According to the Arup tracker, Paris, Vancouver and Singapore are among the cities with the highest rating and are judged as best placed to be leaders of the future. This is owing to clear action on critical factors, such as flood risk and access to renewable energy, along with other major issues like demographic shifts and liveability. Other cities were categorised as ‘leader’, ‘contender’, ‘emerging’ or ‘aspiring’, based on preparedness for future success.
Arup’s analysis also reveals how tomorrow’s leaders could differ from the best-performing cities today. According to Andy Hodgson, global advisory services leader at Arup, ‘There are new, emerging cities leading the way in building resilience to extreme weather, like severe heatwaves and flooding, and challenging the traditional powerhouses.’
Lima is a leader for investor attractiveness, for example, showing potential to challenge traditional powerhouse cities, with Peru rising as a regional leader in green finance. Cities like Seoul, Melbourne and Buenos Aires are also championing climate action and resilience, demonstrating credentials as frontrunners for investor attractiveness.
Need to act now
The Arup report authors note a growing relationship between cities with strong climate resilience plans, and their potential to attract and retain investment, business, and talent. The tracker found 76 per cent of cities studied have well-developed climate strategy plans, and Arup warns that cities need to put them into action, as failure to manage climate risks can be detrimental to a city’s global competitiveness.
The Cushman & Wakefield study argues that climate change is placing all cities at greater risk from future weather events. It presents case studies of both adaptation and mitigation strategies by different cities around the world. And it reinforces the view that real estate stakeholders need to act now by conducting risk assessments, understanding government-led measures on climate, identifying the highest risk assets and issues, and enacting operational changes and capital upgrades.
Access Arup’s City ‘Competitiveness Redefined Tracker’ here.
Access Cushman & Wakefield’s ‘Climate Risk: Global Cities Outlook’ report here.
