Originally published in Butterworths Journal of International Banking and Financial Law - February 2012.

This article highlights why it is important for lenders to be aware of the ongoing initiatives driving the sustainability and green agenda.

KEY POINTS

-  There is a mountain of “green” legislation and environmental regulation, both local and international, which is influencing the real estate industry. Compliance with regulations/ legislation is often mandatory and lenders will want to be sure their borrowers are not in breach, particularly when making lending decisions. Understanding what drives the sustainability and green agenda will lead lenders to be better informed about borrowers and their businesses.

- Is there a link between value and “being green”? Real estate industry players are collaborating on benchmarking products which will assess and measure the link between the sustainability of a property and its value. This link could influence lending decisions in the near future, so awareness of the ongoing initiatives in this area will assist lenders, were this link to become part of the mainstream process of lending decisions.

- The finance world is fast moving, particularly when it comes to the scope of new products offered. As the sustainability agenda gains traction, it is likely that the market will reflect this and green lending products could become more attractive to certain borrowers. Well advised lenders benefit from an understanding of the legislation and ongoing green initiatives in the real estate sector.

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