Climate Change and Environmental, Social, Governance (ESG)
The Mortgage Bankers Association (MBA) is committed to working with policymakers as they develop climate change and Environmental, Social, Governance (ESG) policies that could have an impact on the commercial and multifamily real estate industry.
Overview: MBA will advocate for reasonable policy approaches to address the management and disclosure of climate change risk as it affects commercial and multifamily real estate finance. MBA also will support reasonable approaches to ESG factors that appropriately balance operational burden with the usefulness of the disclosed information. Any development of climate change risk or ESG policies affecting the commercial and multifamily real estate finance industry should recognize the evolving understanding of both climate risk and ESG-related lending and investing.
MBA climate change and ESG initiatives:
- MBA's four-part ESG webinar series: On Tuesday, October 12, MBA hosted the first of a four-part series on environmental, social, and governance (ESG) and its intersection with commercial real estate finance. The event, "ESG 101, How ESG Is Changing Commercial Real Estate," featured an overview of ESG, presented by Ernst and Young, and a panel discussion among MBA members on how ESG is emerging in the commercial real estate finance space. Over 240 members participated in the webinar.
- MBA's Commercial Real Estate Finance (CREF) Green Lending Roundtable: The Green Lending Roundtable consists of MBA members that work together to gather and share information on emerging investor expectations and appetites on climate risk and ESG, and to identify policy and other trends and conditions in climate and ESG investing. Through the Green Lending Roundtable, MBA is working with its members to navigate the intersection of managing climate risk and meeting ESG and other green lending goals.
- MBA's collaboration with Mortgage Industry Standards Maintenance Organization (MISMO): MBA is working with MISMO, the real estate finance industry's standards organization, to facilitate the development of green lending and ESG standards, including, but not limited to, data, terms, and definition to support the flow of consistent information throughout the mortgage finance ecosystem. On December 15, 2021, MISMO launched its updated Commercial Green Utility Dataset. The dataset and accompanying package of resources help facilitate the efficient exchange of green utility information across the commercial real estate finance industry. The dataset standard has achieved "Candidate Recommendation" status, which means that it has been thoroughly reviewed by a wide range of organizations and industry participants and is available for use across the industry.
Timeline on Climate and ESG Policy Developments (What's next?):
- SEC rulemaking on climate and ESG disclosures expected sometime soon.
- On October 21, FSOC published it's report outlining climate-related risks to U.S. financial system, including how member agencies can improve climate-related disclosures and better incorporate climate risk into regulatory and supervisory actions. The report identifies climate change as an emerging and increasing threat to financial stability and outlines a series of recommendations for financial regulators to take, including expanding climate disclosures, addressing data gaps, creating climate committees, and building coordination on financially-related climate issues between agencies.
- Federal Reserve, OCC, SEC, and other state regulators statements may indicate possible direction and intent as to climate and ESG.
- Congressional climate- and ESG-related hearings and proposed legislation.
- Internationally, continuing climate- and ESG-related developments, e.g., by Financial Stability Board (FSB) and G20 Sustainable Finance Working Group.
To get involved, please contact Adrian Ballinger at 202-557-2774
Climate and ESG advocacy:
- November 15, 2021: Response to FIO's Climate-Related Risk in the Insurance Sector RFI
- June 14, 2021: Response to SEC's Climate Risk and Disclosure RFI
- April 19, 2021: Response to FHFA's Climate and Natural Disaster Risk Management RFI
- February 8, 2021: Response to New York Department of Financial Services October 29, 2020 memorandum regarding climate change and financial risks
Upcoming MBA climate and ESG resources:
- Coming: White Paper on ESG
- Coming: Overview of relevant climate-change and ESG disclosure developments