This paper is written by: Munich Re and PGGM Introduction Climate change is affecting the mindset of investors globally in a multitude of ways. A term originally defined for companies in the coal and oil industry ‘stranded asset risk’, is increasingly part of the broader investment vocabulary and linked to climate change. As a result of increasing awareness but also the Paris Climate Agreement, more and more real estate investors are taking climate-related financial risks into account. From a real estate perspective, properties are unlikely to become truly stranded as could happen with an oil well, but they do run the risk of becoming obsolete if they are no longer capable of generating rental income. In our view climate change related factors could cause property obsolescence through two partially related channels. The first is due to a lack of adherence to local regulation which forbids landlords to lease space and as such generate income. The second is because of an absolute absence in tenant demand for a specific location as no company or family wants to be housed at that particular location. The first type of risk is also known as transition risk and affects all properties in a jurisdiction while the latter depends on the climatologic characteristics of a specific location. Transition risk is largely manageable by the asset owner through retrofitting the building in line with requirements but could create the necessity for large unanticipated investments and therefore disappointing returns. The path of changes in requirements is uncertain as these are driven by policymakers and regulators. This keeps investors in the fog whether they do too much or too little from a purely financial return driven point of view.