Publications

- March 1, 2022: Vol. 14, Number 3

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The third generation: Outcomes and opportunities in moving to ESG Gen 3 for real estate investors

by Paige Mueller and Catherine Ann Marshall

Discussions about environmental, social and governance (ESG) programmes exploded in 2021, as a number of social movements significantly raised awareness of diversity, equity and inclusion (DEI), and government and regulatory agencies increased scrutiny of climate risk.

Industry leaders have well-established ESG programmes and reporting. Current legal considerations, as well as expected changes to regulatory frameworks, should compel the rest of the industry to develop and improve similar programmes. Recent comments from the US Federal Reserve, the Securities and Exchange Commission, and the Federal Insurance Office imply that climate change, in particular, is likely to quickly become a larger part of the lending framework, compliance regulations and insurance market. With skyrocketing insurance claims and premiums from extreme weather, future insurance pricing is at risk (see graph on page 26). Even the unthinkable — denial of insurance for certain high-risk events — may

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