Call to Action — Sustainability Due Diligence for Commercial Real Estate Lenders

The Toolkit was relaunched by BBP in February 2024 and gives commercial property owners practical guidance on how to ensure sustainability risks and opportunities are reviewed during the acquisition process. The Toolkit is divided into 3 parts namely: (i) the Sustainability Investment Checklist, which sets out information required during the due diligence process; (ii) the Investment Critical Decision Trees, which have been developed to help property owners identify risks and determine any mitigation measures; and (iii) Asset Onboarding, which provides important questions that should be considered post-acquisition. Importantly, to help guide lenders, the Sustainability Investment Checklist highlights specific checks deemed high priority for lenders, based on feedback from members of CREFCE and LMA.

We believe it is important for lenders, buyers, vendors and agents to be aligned on the sustainability due diligence as far as possible in order to reduce friction in the market, improve efficiency and to ensure that sustainability considerations can be properly taken into account. This is an area where industry collaboration is therefore key to ensure that the right tools are available to promote constancy and efficiency in the market.

Feedback from participants indicates that the list of high priority questions for lenders in the Sustainability Investment Checklist are useful but may still be too detailed as a starting point. We are calling for on you, our members, to provide feedback on your experiences of using the Toolkit, particularly the list of priority questions for lenders included in the Toolkit.

We intend to host a follow up meeting in January 2025 with market participants to identify whether any follow up work is needed to evolve the guidance in the Toolkit to reflect what lenders need. If you would like to provide feedback, be involved in this work or find out more, please reach out to me (hannah.vanstone@lma.eu.com).