Climate Change and ESG Impacts on Commercial Real Estate

climate change and flooding

CRE needs to prepare for a shifting landscape.

By Tony Liou, Partner Energy President

As President Biden signs sweeping climate change executive orders, the commercial real estate industry is also ramping up the conversation around Environmental, Social, and Governance (ESG). Just this month, at the virtual MBA CREF21: Lending, Investing, Servicing and Technology Convention & Expo, I was on a CRE Finance Emerging Issues panel to discuss climate change and ESG impact on CRE, moderated by Michael Berman, President & CEO of M&T Realty Capital Corporation. One clear consensus amongst all the panelists was that ESG is here to stay.

The State of Affairs

ESG has been gaining more traction in the last six months, especially with investors who want to mitigate their risks and who see ESG not only as a matter of ROI, but as an evaluation methodology. ESG is now a risk management tool, and they want to mitigate their risks by targeting funds with good ESG performance (I’ll discuss ESG metrics a bit later).

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