Beyond Risk Management: How sustainability is driving innovation in commercial real estate finance

The commercial real estate finance sector is witnessing a dramatic shift in attitudes towards the sustainability agenda. Leading lenders are now exploring new opportunities that go well beyond risk management through sustainability initiatives that drive new business, strengthen customer relationships and improve the data they hold on the buildings in which they have an interest.

The report outlines the drivers and opportunities to lenders by showcasing best-practice examples, including:

• Improved borrower engagement, where ING Bank and ABN AMRO have used innovative technology as an engagement tool to help their borrowers identify energy improvement measures that will provide both a financial return and improved environmental performance.
• New lending products, where Lloyds Bank has launched its Green Lending Initiative.
• Deep integration of sustainability practices, where BBP members Hermes Investment Management and TH Real Estate have taken learnings from their longstanding direct real estate investment funds and are applying this to the newer debt side of their business.

The report also issues a call to action urging real estate lenders to recognise the significant opportunities available, explore the commercial and reputational prizes to be won and collaborate to develop standards that will help products and services to become mainstream.