With the progressive adoption of the TCFD across financial markets, climate-related scenario analysis is fast becoming a business strategy norm. As a key recommendation of the TCFD, a climate change scenario analysis aids corporates in understanding the strategic implications of climate-related risks and opportunities. CDL completed our third study in December 2022 to better understand the short- to medium-term financial implications of climate change and COVID-19-related climate risks trends. Factoring in recent developments and more up-to-date literature, the third study has incorporated methodology and data updates, as well as the inclusion of new risks to be quantified, on top of an updated scope coverage.

Parameters 1st Study: 2018 2nd Study: 2019 – 2020 3rd Study: 2021 – 2022
Climate Scenarios 2°C and 4°C warmer scenario 1.5°C and 2°C warmer scenario Orderly scenarios – Net Zero by 2050 (1.5°C)1
Disorderly scenarios – Delayed Transition (2°C)1
Types of risks Physical and Transition Risks
Timeframe 2030 Short term : Present – 2030
Medium term : 2030 – 2050
Long term : 2050 – 2100
Short term: Present – 2030
  • Singapore
  • China
  • UK
  • Singapore
  • China
  • UK
  • USA
  • Singapore
  • China
  • UK
  • USA
  • New Zealand
Baseline year 2016 2018 2019 (with 2020 caveats included where relevant)
Business units Development Properties (DP), Investment Properties (IP) and Hotel Operations
1 Terminologies from Network for Greening the Financial System (NGFS)’s Framework.

The third study encapsulates the following updates:


The analysis considered both physical and transitional risks across five key geographies and business units for a 2030 timeframe. It quantified CDL’s financial impact from risks that are most likely to manifest by year 2030, and estimated the annual incremental financial impacts expected in a single year (2030).2 In view of the fast-changing and unpredictable nature of climate change, it is not realistic to project the impact of climate risks beyond 2030.

Additional Scope and Parameters

  • New Zealand as an additional geography and market segment: hotels business unit
  • Updated baseline year from 2018 to 2019 (note: 2020 and 2021 are not used due to COVID-19)
  • Updated data sources that are now available (e.g., IEA prices, NGFS risk factors)
  • Trends-specific risk factors: mainly potential loss of revenue from green rental premiums, insurance premiums and additional construction costs due to labour productivity losses
  • Potential directional effects of another pandemic

Key Risks and Impact

  • Top three physical risks3:
    i) green construction cost
    ii) maintenance cost (carbon price)
    iii) potential revenue loss of green rental premium*
  • Top three transitional risks3:
    i) energy cooling costs
    ii) drop in labour productivity (construction cost increase)4
    iii) insurance premium increase4
  • Transitional risks remain the dominant risk to CDL.
  • Expected physical financial impact has almost tripled for 1.5°C scenario compared to 2°C scenario
  • For both 1.5°C and 2°C scenario, Singapore is the country with the highest estimated annual incremental financial risk.5
  • Floods (river and flash floods) continue to be the extreme weather event that pose the largest acute physical risk to CDL.
  • Estimated financial impact of year-round physical risks is more than extreme weather events. This includes climate-related insurance increase, increased labour costs due to heat stress, and energy cooling costs.
  • DP are the most exposed to transition risks, whereas Hotels are most exposed to physical risks.
  • Singapore is the most exposed country since it has by far the largest share of DP and IP, which are each affected by two out of the top three risks (by estimated annual incremental financial impacts).
  • The likely estimated financial impact would be approximately S$120 million based on cost of inaction in addressing physical and transitional risks aligned with 1.5°C scenario in year 2030, against a 2019 baseline year.
2 The rate of change of impacts between 2019 and 2030 was not modelled (i.e. impacts reported are not cumulative) due to limitations in determining the rate of change of impact.
3 By absolute incremental impact under 1.5DS and 2DS.
4 New financially quantifiable risks identified in this study.
5 Amongst five markets studied, Singapore has the largest proportion of DPs and IPs. These two property types are affected by the two most impactful transitions risks i) green construction cost premium, and ii) potential loss of green rental premium revenue. DP has the highest overall risk under 1.5°C but is overtaken by IP under 2°C.


Charting the Way Forward for a Net Zero Future

High Risk
Moderate Risk
High Opportunity
Moderate Opportunity

* High Risk: financial impact amounting S$20 million and above
* Moderate Risk: financial impact below S$20 million

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CDL GET Strategy Alignment Adaptation and Mitigation Category Climate Change Risks or Opportunities Covered Level of Risk6 or Opportunity in 2030 Description of Potential Financial Impact Priority Markets

(Design and Build)
Sustainable Construction Green features construction cost premium Designing and constructing new net zero buildings more cost-effectively Singapore, China, US and UK
Construction material cost increase (carbon price)
Labour cost increase due to heat stress (New) Improving construction productivity and footprint; reducing outdoor work risk Singapore, China
Maintenance (Scope 1-3 GHGs), Waste and Water costs for DP Singapore, China

Green Retrofits Maintenance (Scope 1-3 GHGs), Waste and Water Costs for IP and Hotels Encouraging waste recycling and reduction Singapore, US, UK
Energy cooling costs Improving energy and water efficiency in accordance to latest green building standards Singapore, China, US and UK
Potential loss of green rental premium revenue (New) Meeting increased customer preferences/demand Singapore, UK

(Strategic review of portfolio and investments)
Extreme Events Adaptation and Mitigation Business damage and loss to due to extreme events Avoiding or reducing exposure to extreme events risks for new developments Singapore, UK
Climate-related insurance premium increase (New) Improving existing developments’ resiliency to extreme events Singapore, UK, US
Changing demand patterns Avoiding stranded assets Singapore, China, US, UK, and New Zealand