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CREFC Survey Reveals Climate and Property Resilience Are Top of Mind for CRE Market Participants

 




NEW YORK, June 27, 2022 
– The CRE Finance Council (“CREFC”), the industry association that exclusively represents the $5.1 trillion commercial real estate finance industry, today released new data from its 2022 ESG Survey, gauging its members’ sentiment on Environmental, Social and Governance (“ESG”) issues in commercial real estate (“CRE”) finance. The survey reveals that regulatory considerations and investor demand for transparency are increasingly important drivers behind ESG disclosure and reporting frameworks. The findings come as the Securities and Exchange Commission (“SEC”) looks to mandate, for public companies, ESG disclosure frameworks, and has taken a more watchful eye on potentially misleading ESG investment activity.

Regulatory compliance top of mind, but disclosure frameworks unclear
With an increasing focus on ESG in CRE lending and investing, CREFC’s survey finds that while 55% of industry participants have an ESG framework in place, more than half (55%) report that they do not use the ESG disclosure frameworks promoted by policymakers, primarily the Task Force on Climate-Related Financial Disclosures (“TCFD”). This framework serves as a template for many regulatory agencies, with the SEC acknowledging that its proposed climate disclosures are similar to those based on the TCFD.

“While the CRE industry anticipates increased regulatory oversight of ESG investments and offerings, the lack of standardization for compliance and disclosure requirements across different sectors, subsectors, and industries creates challenges,” says Sairah Burki, Managing Director, Regulatory Affairs & Sustainability, CREFC. “To help our members understand the regulatory landscape and adapt to new requirements, CREFC’s Sustainability Initiative is in the process of developing climate-related disclosures for our Investor Reporting Package™.” Such data fields once developed and finalized can be utilized by and highly useful to balance sheet lenders as well.

From an investment perspective, a majority of market participants (67%) view property-level data as the most important information when making an investment decision. Tenant data is also gaining significance, ranking as the second top consideration (34%), followed by sponsor ESG policies (33%).

Property resiliency at the forefront
According to the survey, environmental components rank highest among respondents’ ESG priorities, with a focus on the impact of climate on property and buildings’ ability to weather the impacts of the environment such as natural disasters and overall longevity to the elements. Nearly three-quarters (71%) rank property resilience as their top concern in their ESG assessments, followed by the impact of property on climate (64%), such as building carbon emissions.

“It’s not at all surprising that resiliency reigns supreme in terms of data requirements. Before the moniker ESG became popular, CRE investors still needed to understand the ability of collateral to withstand climate stress. Resiliency contributes to overall creditworthiness,” adds Burki. “And as the focus on climate change accelerates, many investors also want to know more about a property’s impact on climate. Therefore, it will be imperative for property owners and operators to accurately disclose relevant data in a way that is easily understood by investors, lenders and other market participants.”

Interest in the Social and Governance components of ESG are evenly split among respondents in their ESG assessments. Housing affordability dominated social considerations, with two-thirds (66%) of industry participants listing it as the most important factor in their ESG social frameworks. Such considerations are informed by the current housing affordability crisis here in the United States. .

Enhancing ESG in commercial real estate finance
As the CRE finance industry continues to navigate evolving ESG regulations, CREFC recently submitted a response to the SEC’s proposed climate-risk disclosure requirements to improve and establish clear, standardized disclosure rules. It also led a similar joint-trade effort.

CREFC established its Sustainability Initiative in early 2021 to align the objectives of its members and the CRE finance industry with the opportunities and challenges of ESG. With an initial focus on climate risk in CRE finance, the organization is launching its social effort in 2022 with a focus on identifying the social policies within ESG that are impacting the industry.

CREFC’s ESG survey comes on the heels of its first Sustainability Summit, hosted on June 15, 2022 as part of its Annual Conference. The Summit featured industry-leading speakers from Blackstone and J.P. Morgan, exploring the intersection of ESG and CRE finance and key considerations for the industry looking ahead.

To learn more about CREFC’s Sustainability Initiative, click here.

Survey methodology
CREFC surveyed 115 of its members, which include banks, commercial and multifamily real estate owners, investors, lenders, rating agencies and service providers, among others. Respondents were surveyed online from March 29 to April 18, 2022. To view the full results, click here.

About CREFC
The CRE Finance Council (CREFC) is the trade association for the commercial real estate finance industry with member firms including balance sheet and securitized lenders, loan and bond investors, private equity firms, servicers and rating agencies, among others. CREFC promotes liquidity, transparency, and efficiency in the commercial real estate finance markets, and acts as a legislative and regulatory advocate for the industry, playing a vital role in setting market standards and best practices, and providing education for market participants.



The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2022 CRE Finance Council. All rights reserved.
CREFC Survey Reveals Climate and Property Resilience Are Top of Mind for CRE Market Participants
June 28, 2022
On June 15, the final day of CREFC’s June Conference 2022, CREFC’s Sustainability Initiative hosted a Sustainability Summit (Summit), a half-day of programming focused on the intersection between ESG and commercial real estate (CRE) and CRE finance.

News

House Committee Markup Includes Affordability Bills

June 27, 2022

On June 23, the House Financial Services Committee advanced 10 bills during a markup session, including several housing-related bills. The partisan legislation is unlikely to advance in the closely divided Senate. Legislation of interest to CREFC members is highlighted below:

  • H.R. 4495, the Down Payment toward Equity Act
    • A bill offered by Chairwoman Maxine Waters (D-CA) that would authorize $100 billion for a new HUD grant program to provide financial assistance to first-time, first-generation homebuyers to put toward a down payment and other upfront costs to purchase a home. This funding would help address multigenerational inequities in access to homeownership and help close the racial wealth and homeownership gaps in the United States.
    • Passed the Committee by a vote of 28-23.

  • H.R. 68, the Housing Fairness Act of 2021
    • A bill offered by Representative Al Green (D-TX) that would authorize increased funding for the Department of Housing and Urban Development’s (HUD) Fair Housing Initiatives Program (FHIP) and make a number of reforms to FHIP. It would also establish a new competitive grant program at HUD to support comprehensive studies of the causes and effects of ongoing discrimination and segregation, and the implementation of pilot projects to test solutions.
    • Passed the Committee by a vote of 28-24.

  • H.R. 3111, the Grandfamily Housing Act of 2021
    • A bill offered by Representative Ayanna Pressley (D-MA) and Representative Jim McGovern (D-MA) that would authorize $100 million to establish a pilot program at the Department of Housing and Urban Development (HUD) to support the housing needs of intergenerational families through supportive services.
    • Passed the Committee by a vote of 29-24.

  • H.R. 6841, the Small Business Fair Debt Collection Protection Act
    • A bill offered by Representative Al Lawson (D-FL) that would amend the Fair Debt Collection Practices Act (FDCPA) to extend protections that are currently in place for consumers to guard against certain predatory debt practices, to also apply to small business borrowers. Specifically, it would expand the definition of debt to include debt incurred from small business loans, restrict the means and methods by which collectors can contact small business debtors, and limit actions of third-party debt collectors who attempt to collect debts on behalf of another person or entity.
    • Passed the Committee by a vote of 29-24.

  • H.R. 4586, the Risk-Based Credit Examination Act
    • A bill offered by Representative Ann Wagner (R-MO) that would provide discretion to the Securities and Exchange Commission (SEC) to prioritize its examination process of credit rating agencies as it deems appropriate, which means the SEC would only examine agencies if it determines there is a reason to do so. The bill does not remove the requirement that the SEC examine credit rating agencies annually.
    • Passed the Committee by a voice vote.

Contact 

Justin Ailes
Managing Director, Government Relations
202.448.0853
jailes@crefc.org
The partisan legislation is unlikely to advance in the closely divided Senate.
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2022 CRE Finance Council. All rights reserved.
House Committee Markup Includes Affordability Bills
June 27, 2022
On June 23, the House Financial Services Committee advanced 10 bills during a markup session, including several housing-related bills. The partisan legislation is unlikely to advance in the closely divided Senate. Legislation of interest to CREFC mem

News

Regulatory Agenda Highlights

June 27, 2022

Twice a year, the federal Office of Information and Regulatory Affairs (OIRA) publishes rulemaking agendas for nearly all federal agencies. Known as the Unified Agenda, the spring and fall updates outline an agency's schedule for proposing and finalizing new rules. While the agencies are not beholden to the published timetables, they provide a helpful preview of what the priorities will be under the current leadership.

Below, CREFC has highlighted key issues in the spring 2022 Rulemaking Agenda. We will further analyze these issues and provide more information in the coming weeks. Click here for a sharable version of the chart below.

Contact 

Justin Ailes
Managing Director, Government Relations
202.448.0853
jailes@crefc.org
CREFC has highlighted key issues in the spring 2022 Rulemaking Agenda.
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2022 CRE Finance Council. All rights reserved.
Regulatory Agenda Highlights
June 27, 2022
Twice a year, the federal Office of Information and Regulatory Affairs (OIRA) publishes rulemaking agendas for nearly all federal agencies. Known as the Unified Agenda, the spring and fall updates outline an agency's schedule for proposing and finali

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