Finnish real estate as transmission channel for climate risks into financial risks
Martikainen, Max (2026)
Kandidaatintyö
2026
School of Engineering Science, Tuotantotalous
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi-fe2026052654769
https://urn.fi/URN:NBN:fi-fe2026052654769
Tiivistelmä
This thesis examines how climate risks may affect the Finnish real estate market and how these risks can be transmitted into financial risks within the broader financial system. Climate change is increasingly recognized as a source of systemic economic risk, particularly through policy, technological, and energy market transitions associated with the shift toward a low-carbon economy. Real estate is especially exposed to such developments due to its long-life cycle, energy dependence, and central role in household wealth, investment portfolios and as collateral for bank lending.
In Finland, where heating demand and electricity use are significant determinants of operating costs, changes in energy prices, regulatory requirements, and energy efficiency standards may influence property values, rental income, and financing conditions.
The study adopts a forward-looking scenario-based approach using climate transition pathways developed by the Network for Greening the Financial System (NGFS). These scenarios are applied to examine how evolving climate policies, technological change, and energy market developments may affect electricity pricing, renovation needs, and cost structures in the real estate sector. The analysis focuses on key transmission channels, including asset valuation, cash flows, and credit risk, through which climate-related changes may influence financial stability.
In Finland, where heating demand and electricity use are significant determinants of operating costs, changes in energy prices, regulatory requirements, and energy efficiency standards may influence property values, rental income, and financing conditions.
The study adopts a forward-looking scenario-based approach using climate transition pathways developed by the Network for Greening the Financial System (NGFS). These scenarios are applied to examine how evolving climate policies, technological change, and energy market developments may affect electricity pricing, renovation needs, and cost structures in the real estate sector. The analysis focuses on key transmission channels, including asset valuation, cash flows, and credit risk, through which climate-related changes may influence financial stability.