Save the planet, and get cheaper debt, too. It should be the ultimate win-win. Green loans are a tool that could help the commercial real estate sector dramatically reduce its huge carbon output, theoretically providing a way for lenders to make money by helping borrowers decarbonize their real estate portfolios. But commercial real estate lenders and borrowers remain hesitant to engage with green lending. Just over half of the largest lenders to the industry globally offered some form of green lending program, an ongoing Bisnow investigation into real estate’s claims around carbon reduction found. Even as green lending to global economies has soared in the past five years, it remains infrequently used in real estate. Debt providers have yet to be convinced that green lending can yield the same returns as traditional lending, while borrowers are hesitant to jump through additional hoops to get financing, industry figures said. Fears about accusations of greenwashing, coupled with pushback in some quarters against the growth of environmental, social and corporate governance factors influencing the corporate world, are also holding green lending back, others said. As well as the findings on green loans, Bisnow’s analysis showed only around a third of lenders had a decarbonization target that applied to their real estate loan book — meaning the majority aren't aligned with the decarbonization targets of their home countries. As it stands, a moral imperative is one of the reasons lenders and borrowers are engaging with green lending. But guilt won’t lead to the market making changes by itself, said James Wong, executive chairman of Hong Kong-based Hon Kwok Land Investment Co. The financial imperatives need to be clearer, and for that to happen, the structure of green lending has to change. “If you want to put a number on it, guilt's worth a quarter point on interest on a loan,” he said. “That's it. That's guilt. Anything beyond that, it's got to be something that can flow down to the bottom line. Right now, that's not matching up.” Read the full story here. | 
