Montréal, Canada
Today, my home city of Montréal welcomes the 21st EU-Canada Summit, with António Costa, President of the European Council, and Ursula von der Leyen, President of the European Commission, representing the EU. Leaders are expected to launch an “alliance for the future”, a framework for shared prosperity and economic security, and to pursue further alignment through CETA. Closer alignment with Europe can bring capital, and capital brings expectations around governance, transparency and risk management.
This is the argument Richard Betts and I make in our Perspectives Paper, Canada’s Capital Moment Runs Through Climate Credibility (see report below): Canada is competing for international capital, and commercial real estate is where that capital will increasingly judge Canada’s climate credibility. Two realities sit at the center of this discussion: physical climate risk is already reaching price, and investors will trust, and ultimately underwrite, only what owners can document for each asset.
The science is now on record. Canada’s own Changing Climate Report 2026 confirms that the country has warmed nearly twice as fast as the global average since 1970 and projects approximately 0.9°C of additional warming over the 2021 to 2040 period under every emissions scenario. For an asset bought today, that falls within a normal hold period and the term of its financing. It is not a long range scenario. It is the underwriting horizon.
Insurers and lenders have already absorbed this reality. Insured losses in Canada reached $37 billion between 2016 and 2025, compared with $14 billion in the previous decade, and OSFI Guideline B-15 now requires federally regulated financial institutions to report on climate risk. Physical risk reaches value through insurance costs, financing terms and the assumptions investors make about future income and exit values.
We know that owners and investors already price climate risk and sustainability when they underwrite acquisitions, often well before valuers reflect these considerations in appraisals. In research undertaken last year with Colliers, Impact of Climate Risks and Sustainability Factors on Commercial Real Estate Values, brown discounts proved easier to identify than green premiums. Markets tend to penalize risk more quickly than they reward resilience. Our current follow-up work on insurability goes one step further, examining how an asset insured at standard terms, insured at elevated premiums, or facing reduced insurability could affect net operating income and liquidity. In my view, insurance terms may become one of the earliest and clearest expressions of climate credibility in financial performance.
This is why asset-level evidence matters. Canada’s sustainability disclosure standards remain voluntary, while many of the European, UK and Gulf investors Canada hopes to attract increasingly expect risks to be documented and substantiated. Our conversation with the real estate arm of one of the Maple 8 pension funds reinforced this point: sustainability remains a primary consideration in investment decisions and a prerequisite for the partners it co-invests with. Owners who can demonstrate asset-level physical risk assessments, credible data and actionable resilience plans give investors greater confidence to allocate capital.
Green value is where climate credibility gets captured. As Canada and Europe deepen their partnership this week, those who build evidence asset by asset will be best positioned to attract the capital Canada seeks. The developments unfolding today have the potential to create meaningful opportunities for both Canada and Europe. Our paper explores why climate credibility may be one of the factors that determines who makes the most of those opportunities.
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