Climate and Resilience

Here is an AI generated picture of a hurricane.? The picture is not real.?

Below are three facts about climate change.? They are all very, very real.

1. Climate change is driving significant increases in severe weather events that put our communities at risk.
2. This change is due to human activities over the past two hundred years that have significantly increased of the percentage of greenhouse gases in our atmosphere.?
3. There are specific things that we can do today to protect more people from severe weather and reduce the amount of greenhouse gas emissions that are making the problem worse.??

Now, there may still be some folks who don’t see these three facts as being true. So be it. Frankly, I don’t care if a person thinks the moon is made of cheese so long as we can all agree that making our properties more efficient and resilience is good business.? Any owner or investor who has managed to stay afloat long enough to read this sentence knows that there is financial value to be gained by making properties more energy and water efficient and less likely to be destroyed or severely damaged in a storm.??

?HOW DOES IT BENEFIT THE ENVIRONMENT AND RENTERS?

When property owners incorporate sustainability and resiliency measures at buildings, they are doing more than just practicing good business.?? They are also combatting climate change and making their buildings more resilient and safer for the people who live there.??

• Mitigating Climate Change: Reducing GHG emissions at multifamily properties directly contributes to mitigating climate change. By improving energy efficiency, using renewable energy sources, and enhancing waste management, these properties can significantly lower their carbon footprint.
• Preserving Natural Resources: Sustainable practices, such as water conservation and waste reduction, help preserve natural resources. This not only helps the environment but also ensures the long-term sustainability of the property and its surrounding ecosystem
• Enhancing Indoor Air Quality: Energy-efficient upgrades often include improvements to ventilation systems, insulation, and the use of non-toxic building materials. These enhancements can reduce indoor pollutants, such as mold and chemicals, creating a healthier living environment for residents.
• Lowering Utility Costs for Renters:?? By making multifamily properties more energy-efficient and reducing GHG emissions, property managers can help lower renters’ utility costs.? In fact, multifamily properties that undergo energy retrofits see an average reduction in energy usage by 15–30%. These reductions can translate into utility savings of $300 to $600 per unit per year, depending on the scale of the upgrades and regional utility costs.
• Reducing Risk of Injury and Loss of Life: Implementing disaster mitigation features, such as reinforced structures, flood barriers, and fire-resistant materials, helps protect residents from the immediate dangers posed by natural disasters like earthquakes, floods, hurricanes, and wildfires. These features are crucial in minimizing injuries and preventing loss of life.
• Improving Emergency Preparedness: Multifamily properties with robust disaster preparedness plans, including clear evacuation routes, emergency supplies, and communication systems, ensure that residents are better equipped to respond swiftly and safely during emergencies.
• Minimizing Disruptions to Daily Life: Resilient buildings are less likely to experience significant damage during disasters, allowing residents to remain in their homes or return more quickly after an event. This continuity is essential for maintaining the stability of the community and reducing the social and economic impacts of displacement.

HOW DOES IT IMPROVE FINANCIAL PERFORMANCE FOR INVESTORS?

Making multifamily properties more resilient and sustainable can have a significant and quantifiable impact on financial performance as well.

• Lowering Operating Costs: Energy-efficient technologies, such as LED lighting, energy-efficient HVAC systems, and solar panels, can reduce energy consumption and lower utility bills for property owners and residents. These savings can be substantial over time, making the property more financially sustainable.? Conserving water by installing low-flow showerheads, faucets, and water-efficient dishwashers or washing machines can significantly reduce costs as well. Since water heating is a significant portion of utility bills, reducing water consumption can also lower heating costs.
• Increasing Access to Capital: Properties with green certifications or sustainable features often see increased market value and can attract more environmentally focused investors. These properties may also qualify for tax incentives and rebates, further enhancing their economic viability
• Mitigating Energy Price Fluctuations: By reducing reliance on fossil fuels and investing in renewable energy, multifamily properties become less vulnerable to energy price volatility. This resilience can protect both property owners and residents from unexpected increases in energy costs.
• Lowering Repair and Recovery Costs: Properties designed with resiliency in mind are more likely to withstand disasters with minimal damage. This reduces the costs associated with repairs and reconstruction in the aftermath of a disaster.
• Justifying Lower Insurance Premiums: Multifamily properties that incorporate disaster-resistant features may also qualify for reduced insurance premiums.

?WHAT IS THE MINIMUM THRESHOLD FOR IMPACT?

Establishing a consistent industry minimum standard for climate and resilience helps property owners set clear impact-driven goals across their portfolio and makes it easier for investors to assess affordable multifamily housing investment opportunities.

The Multifamily Impact Framework? minimum impact threshold for climate and resilience requires that property owners and investors have impact plans and investment strategies that include specific commitments to reduce greenhouse gas (GHG) emissions and achieve utility efficiencies at their properties. ?These plans should also include an assessment of climate-related risk and resiliency features at the property and portfolio level.

Property owners should also commit to utilizing Energy Star Portfolio Manager, GRESB, or an equivalent service for benchmarking and performance tracking at their properties and portfolios.

HOW DO YOU MEASURE CLIMATE AND RESILIENCE AT A MULTIFAMILY PROPERTY?

To quantify and assess the impact and outcomes of their climate and resilience strategy, the Multifamily Impact Framework? recommends that investors and property owners include the following measures in their impact reporting and due diligence.

• Include Energy Star? benchmarking scores or GRESB ratings.? If those are not available, provide?the average annual energy and water consumption per unit for the property or portfolio.??
• The number of properties that have waste reduction and/or recycling policies.
• The number of properties that conduct climate risk assessments, and??
• The number of properties that have business resiliency/emergency management plans that mitigate physical and transition risks.

The Disproportionate Impact of Climate Change on Multifamily Properties

Today, 36% of all greenhouse gas (GHF) emissions in the United States come from residential and commercial buildings, and a significant portion of those emissions come from multifamily properties.?? 40% of all multifamily properties in the United States are in high density urban areas and nearly 2/3s of those high-density urban areas are in areas at high risk of natural disasters and severe weather events.???

Multifamily buildings not only contribute a larger share of GHG emissions that cause climate change, but they are also most likely to be damaged or destroyed by the more severe weather that climate change is creating.???

The sliver lining to this vicious cycle is that while the multifamily sector may be disproportionally impacted by climate change, it also has a disproportionate opportunity to make things better.

And that is why any multifamily impact investment strategy must include actions to lessen the impact of climate change in the future and protect property owners and renters from the rising threat of severe -related damage and destruction that we are facing

Not only can this be done. In many communities, the work has already started. And, it is incumbent upon all of us to do more.

If you are interested in learning more about climate and resilience and other multifamily impact investing standards, please feel free to download the Multifamily Impact Framework?.

Bob Simpson is a nationally recognized expert in affordable, green and healthy housing with more than 25 years of experience working at the highest levels of housing finance and public policy. He is the CEO and Founder of the Multifamily Impact Council, a non-profit organization focused on creating industry standards for impact investing that help increase the flow of capital to support affordable and sustainable multifamily rental housing properties in the United States.