CREFC Issues Report on ESG in Commercial Real Estate
The CRE Finance Council (CREFC), the industry association that represents the $5.1 trillion commercial real estate finance industry, has released new data from its 2022 ESG Survey, gauging its members’ sentiment on Environmental, Social and Governance (ESG) issues in commercial real estate 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 SEC looks to mandate, for public companies, ESG disclosure frameworks, and has taken a more watchful eye on potentially misleading ESG investment activity.
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 commercial real estate 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,” said 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%.
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