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How real estate and construction are improving climate disclosures

Within the real estate, buildings and construction sector, increased awareness of climate-related risks appears to be improving disclosures.

In brief

  • Climate-related financial disclosures within the real estate, buildings and construction sector continue to improve when compared with 2018.
  • Almost one-third of companies score below 5% for the overall quality of climate-related risk disclosures. 

Analysis of the 2019 EY Global Climate Risk Disclosure Barometer showed that the quality score of climate-related financial disclosures within the real estate, buildings and construction sector has improved – from 23% in the 2018 analysis, to 26% in 2019. However, the sector still achieved average scores when compared with the other sectors. Coverage and quality scores are awarded by EY to each company as part of the analysis, on the basis of how they addressed or implemented all of the 11 recommendations by the Task Force on Climate-related Financial Disclosures (TCFD). The overall improvement, when compared with 2018, could reflect the rising level of awareness about the vulnerability of assets (such as building and infrastructure) to physical risks, as well as the potential opportunities from a shift in the demand for sustainable building materials and practices.

The quality of climate-related information varied significantly between companies included in the sample. In some cases, companies reported very little information relative to climate change, while others detailed advanced climate models, and calculated the potential impact of physical and transitional risk on their business and the real estate portfolio.

Of all the areas, coverage of the TCFD recommendations on targets and metrics was the most widely addressed, with an average coverage score close to 75% among all the companies assessed. The other three TCFD areas (governance, strategy and risk management) were covered significantly less — on average, companies covered less than half of the recommendations. Companies in the French, Brazilian and US markets were the top performers, generally covering all areas of the TCFD recommendations.

Of the companies assessed, roughly one-third scored below 5% for the overall quality of their climate-risk disclosures. This shows significant discrepancies in terms of the quality of climate disclosures across markets. Some companies scored zero in quality — mostly located within the Asian and South American markets (an exception is Brazil).

We examined how the real estate, buildings and construction sector performed against the four areas, through which the TCFD recommendations are structured.


Half of the companies in the sector did not include any description of their climate governance structure, indicating this as a key area for improvement. There were also only a few front-runners that included detailed descriptions of the board’s oversight and management’s role in assessing and managing climate-related risks and opportunities.

The overall poor performance of the sector could partly be because of the poor level of disclosures on governance — as a robust climate governance structure is the first step toward an efficient climate and risk management strategy.

Only a few top performers obtained the maximum quality score for governance. These companies provided an in-depth description of their governance structures around climate change — often detailing the activities of the committee — and the reporting structure and responsibilities of the board members. Often, the most detailed and TCFD-aligned information was found in their responses to the Carbon Disclosure Project (CDP).


Over half of the companies assessed provided some description of their risks and opportunities related to climate change, and also their potential impact on the organization’s strategy. Often, these disclosures lacked detail and contained limited references to the process for identifying the risks and opportunities, and for estimating their quantitative impact.

Approximately, one-fifth of the companies assessed were identified by EY as good performers — these companies listed both physical and transitional risks as well as opportunities for different time horizons. Almost half of the companies disclosed some form of quantitative estimation on the financial impacts of the different risks and opportunities, although only a few companies made a clear reference to the assumptions and methodology used.

Only a few top performers considered different climate-related scenarios (e.g., 2°C scenario (2DS), aligned with the International Energy Association (IEA) 2DS). These companies usually disclosed two or three scenarios, typically including a “business as usual” situation and a comparison to a second scenario aligned with the 2°C target.

Unlike other sectors, many companies in the real estate, buildings and construction sector identified and described large opportunities related to climate-change adaptation in their annual financial filings. For example, construction companies have already seen a shift in the demand for sustainable building materials and practices. This is often noted as a competitive advantage for their business.

Risk management

Companies within the sector performed poorly in the risk management areas of their disclosures. Almost half of the companies in the sample did not disclose any information regarding their risk management process for climate-related risks and opportunities.

Among those who mentioned the existence of a risk identification or management process, many did not include details about the process itself and its ownership in the organization.

Almost one-fifth of the companies in the sample provided a clear link between climate-related risks and overall risk management. To further improve their disclosures, companies could enhance the risk identification and management processes, including identifying the individuals responsible for these processes. 

Targets and metrics

About 75% of the companies assessed disclosed some climate-related KPIs, which typically included reporting of the company’s Scope 1 and 2 greenhouse gas (GHG) emissions. Carbon disclosures have evolved and become common practice in the real estate, buildings and construction sector over the past decade. The next step for these companies will be to identify, calculate and disclose their Scope 3 emissions. This could represent a large part of the total carbon footprint for the sector and assist in setting ambitious targets for their carbon emissions.

A number of top performers published an extensive TCFD report with detailed information on the measurement method of their climate-related KPIs, along with the historical evolution of their Scope 1, 2 and 3 emissions. Many of these leading companies have developed and set science-based targets on either carbon intensity or emissions for the near future. 


When compared with 2018, the quality and coverage scores of climate-related disclosures has improved within the real estate, buildings and construction sector. This could partly be explained by the increasing levels of awareness around the vulnerability of assets from physical risks. This article draws on the analysis from the  2019 EY Global Climate Risk Disclosure Barometer and provides a snapshot of the real estate, buildings and construction sector’s uptake of the recommendations by the Task Force on Climate-related Financial Disclosures (TCFD).

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