May 9, 2022

Report: ESG in Commercial Real Estate Lending

Traditionally lending in the real estate market was conducted with little to no regard for ESG risk management practices and with investment being almost entirely valued by returns.

Through the last decade, investment has now evolved to a more responsible approach that seeks to mitigate risky ESG practices in order to collect value. We are now poised at the threshold of the next phase where creating impact through sustainability and active pursuit of ESG opportunities is expected to not only generate competitive financial returns but also address societal challenges.

Active ESG and sustainability agenda is coming to the forefront of a lender’s playbook. The imperatives for effectively integrating ESG risk management into all facets of real estate lending, from borrower analysis, to underwriting, to improving portfolio management, cannot be overstated.

In this report, we demystify ESG investing in the context of real estate lending. We review the ESG trends, from initial evolution to future directions, discuss the importance of ESG investing and its key drivers, and formulate the best practices approach to integrating ESG processes into real estate lending.

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