CFA
The Real Estate Asset Climate Testing (REACT) tool
The Real Estate Asset Climate Testing (REACT) tool empowers investors in real estate in understanding and evaluating flood risk in their portfolios.Â
Under climate change, it is expected that the intensity and frequency of flood events increases in the future. EU companies will soon be required to report on the physical climate risks they face in their operations. However, investors in real estate often lack the tools and expertise to accurately quantify physical climate risks for their assets. As a consequence, commercial providers of climate risk assessments are emerging. However, many of these providers use ‘black-box’ approaches, without disclosing their methodology. This lack of transparency makes it challenging to improve, compare, and combine different results of climate risk assessments.
To address these challenges, the CFA has, together with Climate Adaptation Services (CAS), developed the REACT tool to offer a simple, flexible and transparent approach in assessing flood risks for real estate.Â
- Simple: allows investors to independently assess flood risks.
- Flexible: permits insertion of various data sources into the model.
- Transparent: provides a clear step-by-step explanation how flood risk is determined, including the impact of various input data sources.Â
The REACT tool does not give a detailed description of current and future flood risk, but rather gives a quick and simplified version of a catastrophe model for a first screening of the entire portfolio using in-house knowledge. The tool was developed in the context of the EU project REACHOUT.Â
The REACT tool and a user guide can be found HERE.Â
