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July 26, 2021

How Will Lenders Factor Climate Risks into Underwriting?

By Kathryn Peacock

Lenders and investors are beginning to identify climate change impact as an emerging risk that has the potential to profoundly impact not only their physical assets, but also entire financial systems due to climate change related events. Climate change can result in “direct financial risks, prompting a reassessment of asset values, changing the cost or availability of credit, or affecting the timing or reliability of cash flows,” as noted in “Climate Change and Financial Stability”, published by the Federal Reserve Board of Governors in March 2021. Just last week, Chairman Jerome Powell suggested that the Fed will probably require banks to conduct stress testing for climate vulnerability at some point in the future.

In this Globe St. blog, Kathryn Peacock and Partner Energy’s Tony Liou discuss identifying asset-level climate risks, standardizing the process, and what lenders will do with climate risk information.

Click here to read the article. 

About the Authors

Kathryn Peacock

Kathryn Peacock

Strategic Director
Kathryn Peacock serves as Principal and National Client Manager for Partner Engineering and Science, Inc. With 20 years of experience under her belt, Kathryn has worked on thousands of transactions, subsurface investigations, and site remediation projects for some of the nation’s largest lenders and investors. She holds a bachelor’s degree in Soil Science from Prescott College and a Master’s in Education from the Arizona Teachers Institute. Kathryn speaks and writes frequently on a wide range of environmental due diligence topics, and is dedicated to advancing standards and best practices through her active involvement with industry associations such as ASTM. Kathryn is also a founding member of EFMR (Environmental Facilities Management Roundtable). Environmental Professionals are frequently unique within their companies, having few peers who understand the unique challenges of their day-to-day. This group was formed to help facilitate dialogue amongst industry professionals.

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