Cities under stress: Building and investing in a warming climate
Allianz SE | Munich | Dec 08, 2025
In this interview, Raphael Mertens, Chief Sustainability Officer at PIMCO Prime Real Estate - the manager of Allianz's real estate portfolio and part of PIMCO's global real estate platform - explains how they buy, own, and operate buildings in major cities (offices, logistics, retail and residential properties) and how climate screening now shapes upgrades that protect tenants today and preserve long-term value.
When did climate screening become core to your work?
Mertens: I joined PIMCO Prime Real Estate in 2015, after working in real estate within Allianz Investment Management. Two decades ago, climate wasn't on the radar. That changed first, in 2018, when we started to develop our sustainability framework in response to the Allianz mandate to decarbonize its real estate portfolio, and, second, in 2020, with the launch of ACCRiS, Allianz's climate and natural-catastrophe screening tool for risks like flood, wind and heat.
The old mindset was, "If it's insured, it's safe." But real estate is long-term and tied to place, while insurance renews annually. We now plan for more frequent, more intense events over longer horizons - especially heavy rain - where modeled "return periods" often understate what we're seeing.
What does your screening look like in practice?
Mertens: We run every building through two tools - ACCRiS and Jupiter Intelligence - to see how it could be hit by climate hazards today and under future scenarios. We screen for flooding (from rain, rivers and the coast), hail, wind, heat and cold. Prior to any upgrade program, most assets score low to medium on heat resilience; we would then target that any capital expenditure boosts comfort and cuts energy bills. Models sometimes flag a big 'cold risk,' but in real life our heating systems keep that in check. Flooding is still the No. 1 source of physical damage.
When you think about keeping a building comfortable in hot weather, what do you fix first?
Mertens: We start by cutting demand before adding more machines. First, we aim to keep heat out through external shading, better glazing and a tighter, better-insulated envelope. Next, we move air smartly through the building with optimized ventilation. Then, any cooling needs to be efficient and with well-sealed windows and doors that prevent losses. Finally, we can run a smart building management system to respond to real-time weather and indoor air quality to smooth temperature swings and peak loads.
Once those basics are in place, we can consider larger upgrades. Greening the outside areas with more trees, pergolas and shaded seating can cool the microclimate and lift the tenant experience.
Can you give an example of greening that worked?
Mertens: One of our Milan assets, Corso Italia 23, is a good illustration. A few years ago, it was mostly asphalt and hard surfaces because they were "practical." We've replaced hardscape with trees and planting and turned car courtyards into green courtyards. The result: less reflected heat on the facade, cooler ground-level conditions and better user comfort. It looks better, feels better and measurably improves the microclimate.
Corso Italia 23: By converting hard surfaces into green spaces, the facade reflects less heat
What KPIs tell you the cooling measures are working - and what do tenants feel?
Mertens: We track the meters and the people. On comfort, we watch whether indoor temperatures stay within our target band through the day and whether the comfort score trends toward "neutral." On energy, we track cooling kilowatt-hours per square meter and normalize it by cooling degree days, so a mild week doesn't fake a win. During heat waves, we watch peak demand - success is a flatter, lower curve, not sharp spikes.
On the human side, fewer heat-related service calls, higher tenant satisfaction (NPS) and steady occupancy and renewals tell us the upgrades are working. When peaks flatten, normalized cooling use drops and complaints fall, we know we've moved the needle.
There is evidence that warming and excessive rainfall are causing extreme expansion and contraction in soil. Are you picking up structural issues from changing ground conditions?
Mertens: We're watching the trend, but in our urban locations we haven't seen acute portfolio impacts so far. If we do, we'll tackle them through refurbishments or full redevelopments, where we can investigate properly and fix the root cause.
Are there places you simply won't invest in because of the climate crisis?
Mertens: Yes. There are parts of the world where insurance coverage has become scarce or unaffordable for residential assets, for example in Florida. Essentially, if you can't insure it, you shouldn't own it.
What new tech are you testing that helps with both summer cooling and winter heating?
Mertens: We're in the process of piloting a system of modular heat-exchange panels installed in underground parking garages. In summer, the panels pull heat from the building into the ground; in winter, they draw gentle heat back to help warm the building. Using the stable subsoil as a heat source and sink cuts energy use and reduces the need for fossil-fuel backup. It is still early days in the pilot, but the approach is encouraging.
Beyond building-level measures, who needs to lead on extreme heat in cities?
Mertens: It's a shared job. Owners need to fix their assets, but cities must shape the urban fabric to remain attractive to residents - trees, shade, water and surface materials. The best results come when municipalities set clear standards and work with owners through permitting. Coordination beats one-off fixes. If I had to name one example of a city doing things right, I'm always impressed by what I see in Paris. Their resources, planning and engagement with owners are impressive. Another example is Barcelona, where the city is working the building owners to introduce 'climate shelters' - public spaces within buildings or courtyards that offer people protection from extreme temperatures.
Last question, what are your priorities for overall resilience?
Mertens: Flooding and heavy rain remain the biggest source of potential physical damage. Historic flood maps are no longer a reliable guide, so we plan for extremes - think of the 300-400 L/m² cloudbursts seen in densely populated areas like Valencia: roughly two bathtubs of water per square metre over eight hours. If that hit Munich, you'd see chaos.
Extreme heat is different in that it rarely breaks buildings, but can have adverse health impacts. From a commercial perspective, it can reduce tenant comfort and drive up operating costs. That's why our approach to building resilience manages both types of event: we account for outlier rain events with improved drainage, backflow protection and critical-equipment placement, and we reduce heat stress through envelope upgrades, shading, smart controls and greener courtyards so that within the buildings we manage the user wellbeing is taken care of. Floods set the floor for risk; heat sets the tone for day-to-day performance.
Dec 08, 2025 | Interview, Sustainability, Climate Change
Extreme Heat Adaptation: Resilient Design for Business Stability
The climate our infrastructure was built for is changing. Allianz is adapting to these changes by revising data and backing low-regret measures that keep customers operational.
Dec 08, 2025 | Interview, Sustainability
Climate-Smart Cities: Investing in Resilient Real Estate
Raphael Mertens, Chief Sustainability Officer at PIMCO Prime Real Estate explains how they buy, own, and operate buildings in major cities and how climate screening now shapes upgrades that protect tenants today and preserve long-term value.
Dec 03, 2025 | Reports & studies, Insurance solutions
Directors and Officers (D&O) insurance insights
Senior managers are having to carefully navigate a challenging environment as they head into 2026. Geopolitical and global macroeconomic uncertainty, together with developing areas of risk like artificial intelligence (AI), cyber and even so-called forever chemicals, are elevating liability for directors and officers (D&Os) at both public and private companies.
Nov 28, 2025 | Natural Disasters, Media release
Super typhoon in the Philippines - Allianz donates up to 200,000 euros to regional rescue and relief services
Allianz Group provides financial relief to support affected communities in the aftermath of two recent typhoons • As a major life insurer in the Philippines, Allianz is dedicated to strengthening the long-term resilience and prosperity of its customers, employees, partners, and communities
Nov 26, 2025 | Interview, Natural Disasters, Climate Change
Climate risks and insurability: "We need a triad of prevention, risk-appropriate premiums and government support."
In conversation with Klaus-Peter Röhler, member of the Board of Management of Allianz SE and responsible for Insurance German-speaking Countries, Central Europe, Global Property & Casualty, about growing climate risks, the limits of insurability, and the division of responsibilities between government, insurers and policyholders.
590 results
1of 118
next
About Allianz
The Allianz Group is one of the world's leading insurers and asset managers serving private and corporate customers in nearly 70 countries. Allianz customers benefit from a broad range of personal and corporate insurance services, ranging from property, life and health insurance to assistance services to credit insurance and global business insurance. Allianz is one of the world's largest investors, managing around 761 billion euros* on behalf of its insurance customers. Furthermore, our asset managers PIMCO and Allianz Global Investors manage about 1.9 trillion euros* of third-party assets. Thanks to our systematic integration of ecological and social criteria in our business processes and investment decisions, we are among the leaders in the insurance industry in the Dow Jones Sustainability Index. In 2024, over 156,000 employees achieved total business volume of 179.8 billion euros and an operating profit of 16.0 billion euros for the Group.
As with all content published on this site, these statements are subject to our cautionary note regarding forward-looking statements:
Disclaimer
Attachments
Original document
Permalink
Disclaimer
Allianz SE published this content on December 08, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on December 08, 2025 at 08:09 UTC.
Allianz SE is one of the world's largest insurance companies. The group also develops banking activity. Revenues break down by activity as follows:
- non-life insurance (71%);
- life and health insurance (21.5%);
- asset management (7.5%): EUR 2,512 billion of assets managed at the end of 2025.
This super rating is the result of a weighted average of the rankings based on the following ratings: Valuation (Composite), EPS Revisions (4 months), and Visibility (Composite). We recommend that you carefully review the associated descriptions.
Investor
Investor
This super composite rating is the result of a weighted average of the rankings based on the following ratings: Fundamentals (Composite), Valuation (Composite), EPS Revisions (1 year), and Visibility (Composite). We recommend that you carefully review the associated descriptions.
-
Global
Global
This composite rating is the result of an average of the rankings based on the following ratings: Fundamentals (Composite), Valuation (Composite), Financial Estimates Revisions (Composite), Consensus (Composite) and Visibility (Composite). The company must be covered by at least 4 of these 5 ratings for the calculation to be carried out. We recommend that you carefully review the associated descriptions.
-
Quality
Quality
This composite rating is the result of an average of rankings based on the following ratings: Returns (Composite), Profitability (Composite) and Quality of Financial Reporting (Composite), and Financial Health (Composite). The company must be covered by at least 2 of these 3 ratings for the calculation to be performed. We recommend that you carefully read the associated descriptions.
ESG MSCI
ESG MSCI
The MSCI ESG score assesses a company’s environmental, social, and governance practices relative to its industry peers. Companies are rated from CCC (laggard) to AAA (leader). This rating helps investors incorporate sustainability risks and opportunities into their investment decisions.
