The Voice of Commercial Real Estate Finance

ESG Working Group

ESG Working Group

In late 2019 we formed a working group comprising only representatives from lending institutions to consider how we might usefully support the sustainability agenda from the CRE lending perspective. In this initial phase of its existence, the working group was co-chaired by Kate Drew at LGIM and Vincent Nobel at Federated Hermes.

In May 2021, the group's first output was published - a climate-related due diligence guide for CRE lenders to help them evaluate CRE lending collateral from the sustainability perspective. The guide should support lender conversations with borrowers about asset-level climate resilience and climate impact, as well as sponsor management and governance of environmental and sustainability matters generally and in relation to the relevant collateral. Please feel free to download and use the guide, which is a PDF form that allows scores and notes to be entered, and give us your feedback.

In June 2021, the group was reconstituted with a broader ESG focus and a mandate to promote learning and development and the adoption of more objective approaches to ESG disclosures and data across the CRE finance market.It is now chaired by Vincent only (Kate remains a member of the group, but no longer in a leadership role following her move to Delancey).

The group has a collaborative relationship with the LMA and Better Buildings Partnership, whose Sustainability for Lenders working group was an excellent group and resource in previous years. CREFC Europe also participates in the Green Property Alliance and other ESG related conversations with various industry bodies, and maintains a dialogue with officials at the UK's Department for Business, Energy & Industrial Strategy.

In late 2021, mindful of the need for CRE lenders to be informed about (and perhaps have some influence regarding) the development of science-based approaches to assessing carbon and energy performance of buildings and portfolios and indicators for risk management, reporting and disclosure, we were delighted to join the Global Scientific & Investor Committee (GSIC) of CRREM.  The Climate Risk Real Estate Monitor (CRREM) is a project seeking to develop a tool that allows investors and property owners to assess the exposition of their assets to stranding risks based on energy and emission data and the analysis of regulatory requirements. As it gains ground among sophisticated real estate investors and aligns with other important initiatives ranging from TCFD and PCAF to GRESB, we hope to ensure that our community of European CRE lenders can make constructive use of a seat at this table.

Contact Peter Cosmetatos for further information.