In April last year, the PRA and Bank of England set out their expectations of financial institutions in the published policy statement, “Enhancing banks’ and insurers’ approaches to managing the financial risks from climate change PS11/19’.

In terms of remedial action, reducing our collective carbon footprint is important. Robust digital valuations are already available through firms like ourselves and are significantly contributing to less ‘miles on the road’ for many lenders.

However, the issues are clearly more complex. Understanding the available meteorological data, soil and demographic pressures is essential to understanding how the climate is affecting property assets. Our wetter winters and drier summers are increasing the propensity for flooding, subsidence, and our need to understand the consequent stress on building materials on new and existing property stock.

Last year a large-scale study published in the journal ‘Nature’ analysed data from thousands of locations in Europe and found flood events are becoming increasingly severe in the north-west, including the UK.

The Vienna University of Technology’s analysed records from 3,738 river flood measurement stations across Europe over five decades. Northern England and southern Scotland have seen an increase in flooding of more than 11%. There have been numerous high-profile flooding incidents across the UK in recent years with South Yorkshire and the East Midlands particularly badly hit in 2019.

The ABI reported that insurance payouts to people hit by the recent floods in Yorkshire and the Midlands are expected to reach £110 million. Subsidence claims from the 2018 record-breaking heatwave have reached £64 million, and are still subject to ongoing investigations, so there is potential for more claims for 2019 and the future.

New builds will have to be designed and built of materials that can withstand the effects of climate change – keeping owners cooler in warmer weather and dryer and safer in extreme wet weather, free of subsidence risk, and not built on floodplains. They will need to incorporate a range of new technologies to reduce their energy use, and to cut the energy needed to build them, including the embodied energy in the materials they contain.

Older stock will need to be more energy efficient. We should expect in due course policies that will incentivise homeowners to do this.

Digital valuations help reduce our industries carbon footprint but, with work underway with data partners, they go way beyond that. We are ready to oversee a transformation in our national lending landscape.