Climate Scores Seem To Be Scaring Off Homebuyers. AG Takes Company Behind Them To Court.

Republican Nebraska Attorney General Mike Hilgers filed a lawsuit against a company behind a climate scorecard, alleging it “depressed Nebraska’s real estate market.”

Private company First Street uses inaccurate or incomplete property data to generate climate-risk scores that have appeared on major real estate platforms and harmed Nebraska homeowners, the lawsuit alleges. Major asset managers BlackRock, Vanguard and State Street hold significant stakes in the parent companies of platforms that have distributed the scores, collectively holding roughly 19% to 25%, according to a report from the American Energy Institute and Consumers’ Research.

“First Street’s inaccurate data and analysis has harmed everyday Nebraskans who are seeking to sell and buy homes. My Office won’t stand by while an out-of-state company leverages data to push its climate activism that would never pass muster through our local political processes at the expense of Nebraska homeowners,” Hilgers said in a statement sent to the Daily Caller News Foundation.

“Housing is often the most expensive assets Nebraskans invest in, the sale of which is pivotal for their financial security and housing mobility, and my office will fight hard to protect those investments from outside influences who don’t put Nebraskans’ interests first,” he added.

The attorney general’s suit follows a call to action for federal regulators and Congress to investigate First Street over the scores’ impact on residential real estate.

“First Street’s unaccountable, unapproved climate risk scores have been manipulating American home values for far too long, and Attorney General Mike Hilgers is right to step in and protect Nebraskans,” Molly Vogt, a senior fellow at the American Energy Institute, told DCNF.

First Street, BlackRock, Zillow, State Street and Vanguard each did not immediately respond to the DCNF’s requests for comment.
First Street assigns individual properties scores ranging from one to 10 for flood, fire, wind, air and heat risks, describing its risk scores as “peer-reviewed,” “scientifically validated” and “accurate and reliable at the property level,” lawsuit alleges.

First Street’s climate-risk scores have appeared on major real estate platforms, including Zillow, Realtor.com, Homes.com and Redfin, exposing prospective homebuyers to property-level predictions for risks such as flooding and wildfire. The scores can differ significantly from the Federal Emergency Management Agency’s official flood maps and determinations.

“First Street is making a profit at the expense of the value of Nebraskans’ homes,” Hilgers said in a press release. “First Street passes off misleading and often inaccurate climate speculation in a way that drives down home values and increases costs and frustrations for Nebraskans. The deceptive behavior has to stop.“

The American Energy Institute and Consumers’ Research raised concerns about the scores in a July report, arguing that homeowners have no formal appeals process when First Street’s assessments conflict with federal flood designations. A $6.2 million property that received a 9-out-of-10 flood-risk score despite sitting in FEMA’s Zone X, which FEMA considers an area of minimal flood risk, the report showed.

“Now First Street will have to answer for misleading consumers and presenting inaccurate climate data for real estate value. Consumers’ Research has been sounding the alarm on First Street’s nefarious behavior and will continue to do so. Climate activists should not have a vote in determining the value of homeowners’ property,” Will Hild, Executive Director of Consumers’ Research told DCNF.

Nebraska does not allege that First Street’s predictive models must be completely accurate, acknowledging in the complaint that such models inherently contain some degree of error. Instead, the state alleges First Street misleads consumers by encouraging them to rely on fundamentally flawed predictions without adequately disclosing the models’ limitations, according to the lawsuit.

Homebuyers encounter First Street’s predictions through real estate platforms such as Zillow, which directs users to First Street for information about a property’s flood, wildfire and other climate risks, the lawsuit alleges. First Street provides free scores ranging from one to 10 for flood, fire, wind, air and heat risks, while additional information about the factors is available behind a paywall.

First Street’s flood model identifies more than twice as many properties as facing a 100-year flood risk as government data does, according to the lawsuit. Much of the discrepancy between First Street’s model and government assessments occurs around smaller waterways and tributaries.

Scientific literature has found First Street’s models predict higher probabilities of loss and greater damages than other models and historical claims data, Hilgers pointed out in the suit.

First Street’s climate-risk scores have appeared on major real estate platforms, including Zillow, Realtor.com, Homes.com and Redfin, exposing prospective homebuyers to property-level predictions for risks such as flooding and wildfire. The scores can differ significantly from FEMA’s official flood maps and determinations.

The American Energy Institute and Consumers’ Research raised concerns about the scores in a July report, arguing that homeowners have no formal appeals process when First Street’s assessments conflict with federal flood designations.
First Street’s scores “routinely contradict official FEMA flood maps” and can influence prospective buyers without providing homeowners a transparent methodology or meaningful appeals process, Vogt, a senior fellow at the American Energy Institute, previously told the DCNF.

A $6.2 million property received a 9-out-of-10 flood-risk score despite sitting in FEMA’s Zone X, an area of minimal flood hazard. Buyer interest subsequently collapsed and the property’s price fell, according to a report from the American Energy Institute and Consumers’ Research.

“AG Hilgers is holding First Street accountable for pushing politically motivated, unregulated climate-risk scores. It’s a huge win for consumers. First Street has been eroding American home values and denying homeowners any meaningful path to challenge the damage being done to their largest asset,” said the Executive Director of Consumers’ Research, Hild.

“As James Madison wrote, ‘Government is instituted to protect property of every sort,’ and a family’s home, often their largest asset and surest path to generational wealth, deserves nothing less. I hope Congress follows his lead,” Vogt concluded.

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