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Published on: 22. August 2023

The CRREM (Carbon Risk Real Estate Monitor) model is a tool designed to assess the carbon risk associated with real estate assets, particularly within the context of climate change and transitioning to a low-carbon economy. The CRREM model helps real estate stakeholders, such as investors, asset managers, and property owners, to understand the potential financial implications of carbon emissions and transition risks on their real estate portfolios.

Key features of the CRREM model include:

Carbon Transition Pathways: The CRREM model provides pathways and benchmarks for different real estate sectors to align with the goals of the Paris Agreement and achieve decarbonisation targets. These pathways take into account factors like property type, location, and energy consumption.

Scenario Analysis: The model enables users to conduct scenario analysis to evaluate the potential impact of different carbon pricing scenarios, regulatory changes, and market trends on their real estate assets.

Risk Assessment: By assessing the carbon risk associated with real estate assets, the CRREM model allows stakeholders to identify properties that might be at higher risk due to their energy inefficiency and carbon intensity.

Alignment with Climate Goals: The CRREM model helps real estate investors and owners understand whether their properties are aligned with global climate goals, such as limiting global warming to well below 2 degrees Celsius.

Portfolio Optimisation: Users can use the CRREM model to optimise their real estate portfolios based on carbon risk considerations, potentially reducing their exposure to future carbon-related financial risks.

The CRREM model is part of the broader effort to integrate environmental, social, and governance (ESG) considerations into real estate investment decisions. It’s important to note that developments might have occurred since my last update, so I recommend checking with official sources or relevant organisations for the latest information on the CRREM model and its applications.

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