Climate & environmental risks can negatively impact value

Whether investing or divesting brownfield properties, manufacturing businesses, renewable energy projects, commercial properties or waste management infrastructure, investors should be informed and commercially aware of the climate, environmental and contaminated land risks that may be attached to a property, business or project.

ERS has a wealth of Due Diligence experience to add value during transactions.

Climate Risk & Vulnerability

Investors aligning their portfolios with the EU Taxonomy will require projects and assets to complete a Climate Risk & Vulnerability Assessment to ensure that potential climate hazards have been rigorously assessed according to IPCC climate predictions and guidance, specifically:

  • Identifying climate change hazards that could cause harm to the investment (e.g. increased storm rainfall intensity).
  • Aspects of the investment that are exposed to the hazard (e.g. property basement and ground floor levels).
  • The vulnerability of the asset to the hazard (e.g. whether drainage systems can adapt to extreme rainfall events).

Contaminated Land Risk

Contaminated land risk and liabilities can arise from a range of current and legacy land use and activities:

  • Fuel storage and handling for heating systems, vehicles, plant and machinery.
  • Organic solvent use in manufacturing and ancillary processes (degreasing, surface coating applications and painting).
  • Metal solutions in surface treatment, electroplating and wood preservation operations.
  • Import of waste materials for fill to create level development platforms that may contain a wide range of hazardous materials, including asbestos.

Renewable Energy Development Project Risk

Investors in renewable energy projects should be particularly mindful when projects are being developed as construction and operational stage risks may delay development or interrupt the operational phase of a project impacting energy yield and profitability of the project.  Onerous planning conditions can be imposed to prevent negative impacts in the Environmental Impact Assessment (EIA) process.  Upland wind farm developments may be located with many of the following sensitivities:

  • Upland blanket peat susceptible to landslide and erosion causing physical damage to protected ecological sites and watercourses.
  • Planning constraints that impact on the potential operational viability of a development (e.g. curtailment during bird breeding seasons).

Examples where we have added value

EU Taxonomy & Climate Risk

  • OPW – Climate risk & vulnerability assessment for office refurbishment for the HQ of Dept of Environment, Climate & Communications.
  • Bartra – EU Taxonomy and climate risk assessment for large office campus.

Contaminated Land Risk

  • British Government – strategic environmental liability risk assessment of British Steel during its insolvency & sale.
  • Port of Cork – due diligence during acquisition of former IFI site.
  • NAMA – due diligence during the sale of brownfield development sites.
  • Statutory Receivers – contaminated land assessment & EPA licence surrender prior to sale of assets.