The CRE Finance Council (CREFC), the industry association that represents the $5.1 trillion commercial real estate finance sector, has released new data from its 2022 ESG Survey, assessing its members’ sentiment on the environmental, social and governance (ESG) issues in commercial real estate. real estate financing.
The survey finds that regulatory considerations and investor demand for transparency are increasingly important drivers behind ESG disclosure and reporting frameworks. The findings come as the SEC seeks to impose ESG disclosure frameworks for public companies, and has taken a closer look at potentially misleading ESG investment activities.
With a growing focus on ESG in CRE lending and investing, The CREFC investigation finds that while 55% of industry participants have an ESG framework in place, more than half, 55%, say they do not use ESG disclosure frameworks promoted by policymakers, primarily the Working Group on Related Financial Disclosures to climate (TCFD). This framework serves as a model for many regulators, with the SEC recognizing that the proposed climate disclosures are similar to those based on the TCFD.
“While the commercial real estate sector foresees increased regulatory oversight of ESG investments and offerings, the lack of standardization of compliance and disclosure requirements across different sectors, sub-sectors and industries creates challenges,” Sairah said. Burki, Managing Director, Regulatory Affairs and Sustainability, CREFC.
“To help our members understand the regulatory landscape and adapt to new requirements, CREFC’s sustainability initiative is developing climate-related information for our investor reporting suite. Once developed and finalized, these data fields can also be used and very useful for balance sheet lenders.
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 prominence, ranking second among considerations, 34%, followed by sponsor ESG policies, 33%.