ESG for Lenders and Borrowers

Lenders, borrowers, regulators and investors are putting greater focus on the economic impact of sustainability and ESG. At Dechert, we keep our clients informed as they consider adapting their business models to new laws and industry trends and the changing demands of their investors and clients – including leveraging our grasp of evolving legal mandates and structures to serve dynamic markets.

Dechert lawyers think about the new opportunities for our clients, who view ESG as a critical part of the current economic environment and a path to better financial performance. As our clients pivot into new areas, Dechert offers insight into corporate transactions, structured finance, real estate loans, tax reform and reporting requirements from the new cost of energy efficiency compliance or increased raw material costs. We also help organizations evaluate ESG in credit generally — anticipating how individual investors and institutional firms will balance ESG stipulations.

Dechert’s advice to our clients around the world related to sustainable financings is based on our extensive knowledge of state and federal climate and ESG laws and the structuring of green loans, green bonds, formation of sustainable investment products and executing transactions to comply with the Green Loan Principles and Green Bond Principles. We work closely with many institutional lenders, including representing Freddie Mac with respect to its impact bond series as part of Freddie Mac’s K-Deal program and ...Continue Reading

Key Contacts

Jason S. Rozes

Partner Philadelphia
+1 215 994 2830
Privat Vigand

Partner Paris
+33 1 57 57 80 99

A syndicate of lenders led by TD Securities and including Royal Bank of Canada, Société Générale, Citizens Bank, N.A., Truist Securities, Inc., Banco Santander, S.A., The Bank of Nova Scotia, and MUFG Bank Ltd in connection with multiple loans to finance the US$11 billion take-private acquisition of Switch, Inc. by DigitalBridge and IFM Investors. The loan documents for this financing included negotiated provisions to comply with the Green Loan Principles.
A major insurer in connection with the acquisition and financing of up to approximately $1.6 billion consumer solar loans.
Wells Fargo and Goldman Sachs, as co-lenders, in connection with the origination of a US$1.525 billion floating-rate mortgage loan to finance the acquisition by affiliates of Blackstone of 43 affordable multifamily properties located in Florida from The Cornerstone Group, each of which properties was encumbered by long-term rental restrictions to ensure that they will remain affordable housing properties through the loan term and beyond. Dechert represented the loan sellers in connection with a securitization of the loan via a standalone CMBS execution, making it one of the first non-agency CMBS offering of affordable housing assets, and where the CMBS bonds were given an ESG risk rating by Sustainalytics for aligning with Social Bond Principles developed by the International Capital Market Association. The securitization was the biggest social offering yet in the private-label CMBS market.
A syndicate of lenders led by Morgan Stanley Bank, N.A., and including Bank of China, New York Branch, ING Capital LLC and Landesbank Baden-Wurttemberg, New York Branch, in connection with the origination of a US$1 billion mortgage loan, secured by the 770 Broadway office building in New York. With the involvement of European banks subject to more stringent ESG requirements, we negotiated and included provisions in the loan documents to comply with the Green Loan Principles.
First Help Financial LLC, in connection with transactions totalling approximately US$1 billion, including five 144A securitizations beginning with its inaugural securitization in 2020. Recently, Dechert has assisted First Help in developing a framework based on the Social Bond Principles. First Help is an innovative and fast-growing auto finance company that provides fairly priced auto loans to underserved immigrant communities.
Bank of America, N.A., as mortgage lender, in connection with the US$425 million financing of two connected 26-story office towers known as the JACX, located in Long Island City, New York, owned by a subsidiary of Tishman Speyer. Dechert advised Bank of America, N.A in connection with the mortgage refinancing of a green commercial property in New York City, and the subsequent issuance of green bonds in a commercial mortgage-backed securitization.
Goldman Sachs & Co. LLC and another major bank, as initial purchasers, in connection with the securitization of a bank originated $380M mortgage loan secured by twelve affordable multifamily properties located in Florida. Dechert represented the underwriter syndicate in connection with the issuance and sale of $380M of social bonds in a commercial mortgage-backed securitization.
Freddie Mac with respect to its impact bond series as part of Freddie Mac’s K-Deal program and Green Advantage® program, including: as mortgage loan seller, in multiple securitizations, including the first securitization of its kind, of sustainability focused mortgage loans and multifamily properties securing green, social and/or sustainability bonds; and as mortgage loan seller, in connection with a US$317 million securitization of Tax-Exempt Loans made by state or local housing agencies and secured by affordable rental housing.
Goldman Sachs & Co. LLC and another major bank, as initial purchasers, in connection with the securitization of a $305M portion of a bank originated $525M mortgage loan secured by a multi-building office campus in Bellevue, Washington. Dechert represented the underwriter syndicate in connection with the issuance and sale of $305M of green bonds in a commercial mortgage-backed securitization.
A global asset manager, in connection with the acquisition and financing of up to approximately $300 million consumer solar loans.
A global asset manager, in connection with the acquisition and financing of up to approximately $250 million consumer solar loans.
A major bank, in connection with the financing of up to approximately $250 million consumer solar loans.
A global investment bank in connection with becoming an approved C-PACE lender in both New York City and the State of Florida in anticipation of making large C-PACE loans in both jurisdictions.
A global investment bank in connection with a C-PACE loan in the State of Florida.
A specialty finance company in connection with a C-PACE financing in the State of California.
Acting for Wells Fargo on the acquisition and development of 33 King William Street for their European headquarters, including advising on the sustainability metrics of the initial build which had an expansive roof garden with a biodiverse environment and sustainably manufactured materials throughout. Advising on the subsequent letting of part to corporate occupiers including the lease provisions for co-operation between occupiers in relation to recycling and the reduction of water consumption. The building achieved a BREEAM excellent rating.
Acting on a large portfolio of properties advising on the fund’s green leasing strategy and the inclusion of drafting in the occupational leases granted by the fund. This includes the maintenance of EPC ratings across a diverse range of asset type and the degree of landlord control over the tenant’s alteration of the properties.
Acting on the leasing of Mondrian’s London headquarters in the City of London, including advising the tenant on the enforceability and cost implications of the landlord’s green lease principles in the lease, including the controls over the tenant’s alterations and the establishment of building-wide sustainability forum. The building achieved a BREEAM excellent rating.
Crédit Agricole Corporate and Investment Bank, Natixis and Société Générale, in connection with the acquisition by the Accor group of the Sequana Tower, an emblematic building of 43,000 m2 based in Issy-les-Moulinex and certified HQE, classified as “Excellent” in the “tertiary buildings in operation” category. The transaction was mainly financed by a “green” mortgage loan of €300 million, in compliance with the 2018 Green Loan Principles.
Natixis on the financing of the acquisition by Powerhouse Habitat of a residential portfolio of 16 assets from EDF representing 380 housing units and more than 31,000 square meters of living space, valued at €218 million.
The Student Hotel (“TSH Group”), an Amsterdam-based investor, has subscribed a ground-breaking €82 million green loan to develop and refurbish two hotel projects in France located in Paris and Toulouse, through an ESG financing structure made available by Crédit Agricole Corporate and Investment Bank, for which Dechert LLP (Paris) acted as legal advisor.

Latest Guidance

To Retrofit or Not? (July 19, 2023)

Podcast: It’s Easy Being Green: Sustainability Trends, Potential SEC Climate Risk Disclosure Rules and CPACE Loans, Plus Debt Ceiling Drama (June 7, 2023)

C-PACE Shop Targets Other Mortgage Lenders, Commercial Mortgage Alert (May 12, 2023)

SEC's ESG, Climate Rules Stir Up Questions for Real Asset Managers - FundFire (March 1, 2023)

Fair Lending Compliance for Mortgage Lenders: An ESG Approach (February 3, 2023)

Publication: Climate Risk Exposures — SEC, Congress, Commercial Mortgage Alert (January 6, 2023)

The ESG Climate Change Evolution of Commercial Real Estate Finance: Turning Over New (Green) Leaves (November 1, 2022)

Regulatory Round-up: Climate Risk Disclosures – SEC, Congress, Commercial Mortgage Alert (August 19, 2022)

CREFC Advances Climate Agenda, Commercial Mortgage Alert (April 8, 2022)

Climate Change in the Big Apple: How C-PACE and Mortgage Lenders Can Help New York City Make the Climate Mobilization Act a Success (December 3, 2020)

Flood Insurance, Commercial Real Estate and Climate Change (February 19, 2020)

Climate Change Impact on Commercial Real Estate Finance — What the Industry Needs to Know Today (June 6, 2019)

Additional Presentations

Webinar: ESG: Current Talking Points in the U.S. and the UK/EU (May 16, 2023)

Speaking Engagement: Financing Sustainability: Cracking the C-PACE Code – CRE Finance Council's Sustainability Summit 2023, New York, NY (May 2, 2023)

Speaking Engagement: Will C-PACE Make CRE Greener? An Assessment and Forecast – CRE Finance Council (April 13, 2022)

Speaking Engagement: NYC's Carbon Emissions Law: Lessons Learned So Far and the Countdown to 2024 – CRE Finance Council's After-Work Seminar, New York, NY (December 1, 2022)

Webinar: Climate, Courts, and CRE: Will the SEC Climate Rule Survive? – Hosted by CREFC's Sustainability Initiative (October 21, 2022)

Webinar: Rising Tide of ESG: Session Two | ESG in Debt and Equity Investing (November 4, 2021)

Webinar: Rising Tide of ESG: Session One | Core Principles: ESG Five Ws (October 21, 2021)

Speaking Engagement: Climate Change 101 – Science and Physical Impacts on Planet Earth – CRE Finance Council (June 17, 2021)

Speaking Engagement: Great Expectations: Achieving ESG Objectives in CRE – CRE Finance Council (June 16, 2021)

Speaking Engagement: Beyond the Acronyms: What ESG Means for the CRE Markets – CRE Finance Council Webinar (April 30, 2021)

Scope 3 of the SEC's climate-related rules proposal represents potentially the biggest challenge for the commercial real estate market. Dechert’s Jason Rozes, who also advises the Commercial Real Estate Finance Council (CREFC) on sustainability issues, explains why in the Commercial Mortgage Alert linked in the Latest Guidance section above. Jason Rozes, Partner

ESG for Lenders and Borrowers

Key Contacts

Jason S. Rozes

Privat Vigand

Latest Guidance

Additional Presentations

Jason S. Rozes

Privat Vigand

Matthew J. Armstrong

Jon Burke

Nitya Kumar Goyal

Elizabeth Le Vay