CVaR

The Carbon Value at Risk (CVaR) is a forward-looking risk indicator developed by CRREM. The CVaR is a metric that quantifies the potential financial losses that could result from a given level of carbon emissions in a real estate portfolio or asset. It is based on the idea of “value at risk” (VaR), which is a widely used risk management tool in finance that measures the potential losses of a portfolio at a given level of confidence over a given time horizon. The CVaR takes into account the potential future costs associated with carbon emissions, such as the cost of carbon taxes, regulation, and physical impacts of climate change, such as increased insurance premiums or property damage. It allows investors to assess the potential financial impact of carbon emissions on their portfolio and to identify high-risk assets or sectors.


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