MetLife Investment Management's paper 'Pitfalls & Mitigants of Climate Assessment Software: Recommendations for Evaluating US Commercial Real Estate Climate Exposure' aims to enhance investor understanding of real estate climate assessment software.

It looks to do this through three main ways. Firstly, by demonstrating how software tools are effective for screening baseline physical risks. Secondly, by showing the steps that can be taken post software analysis to avoid false positives for similar assets. And finally, by reinforcing the need for a holistic risk assessment and management strategy, which requires more than a score from a database.

The paper was developed as MetLife Investment Management believes increasing numbers of investors and asset managers of US real estate, both listed and private, are using climate-modelling software tools to identify climate risks and determine mitigation strategies.

Despite challenges, the paper concluded that software modelling tools remain valuable. It goes on to predict that AI will accelerate the improvement in tools used for climate risk identification, government funds to resilience efforts will increase, along with disclosures of physical risks, as well as consistency in classifying and underwriting physical risks.