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Regulations and ESG: The impact of environmental mandates on commercial real estate
Responsible guardianship of the environment is important for the future of the planet and for human flourishing. Current environmental challenges include limiting greenhouse gas emissions that cause climate change, which damages the environment and spawns rising sea levels.
Climate risk also includes heat stress, water stress, extreme rainfall and flooding. In addition to harming actual commercial real estate (CRE), it can severely damage or destroy vital infrastructure. If this type of damage is recurring, it may call into question the long-term viability of an asset or an area. This may challenge CRE values in certain U.S. markets. (See Stewart Rubin and Dakota Firenze, “Rather Than the Flood — A Comprehensive Look at Climate-Induced Water Disasters and Their Potential Impact on CRE in the U.S.,” AFIRE’s Summit Magazine, Spring 2021.) At a minimum, c