Property lenders feel pressure to meet ESG requirements

Property lenders need to better report their performance on a range of environmental, social and governance (ESG) practices, finds a new report released by UCL researchers. The report, ESG in the Property Finance Industry , highlights how property lenders are adopting ESG practices to improve their corporate citizenship, and explores the challenges they are facing amidst greenwashing fears and a complex and dynamic regulatory environment. This is the first report released from UCL's new Centre for Sustainable Governance and Law, based in the Bartlett Faculty of the Built Environment. Large organisations (such as banks and pension funds) have responded to the increased public focus on ESG by diverting funding to impact funds and increasing the granularity of their internal and external reporting. However, smaller organisations, such as property finance lenders, may struggle to shift their organisations to a new, lower-impact footing. These smaller organisations can lack the skills, knowledge, funding, and time to understand and adapt to the new operating and reporting environment. While there is strong demand both from the market and regulators for these lenders to adopt ESG practices, the absence of any global ESG standards, coupled with conflicting definitions and reporting requirements, is creating hesitancy and uncertainty in the market.