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While economic and policy uncertainty may persist, environmental, social, and governance (ESG) and sustainability considerations have become fundamental components of asset resilience and long-term valuation, particularly as the commercial real estate (CRE) industry faces rising insurance costs and the physical risks of climate change. This has contributed to increasingly stringent underwriting requirements of institutional lenders in the face of regulatory and policy shifts. In fact, across the U.S., CRE premiums increased 88% between 2020 and 2025, according to JLL. At the same time, client demands for and expectations of sustainable features are increasing rapidly, according to the 2025 REALTORS® Commercial Sustainability Report, a survey of more than 2,000 real estate professionals conducted by the National Association of REALTORS®. Drivers such as these mean that investing in more resilient real estate can help increase returns and provide competitive advantages, but there may be pitfalls as well, requiring strategic planning to carefully weigh the risks, opportunities, and long-term outcomes.
Perhaps most notably, in 2026, the rigor required of ESG and sustainability data disclosures continues to increase, becoming equivalent to regulated financial information and carrying potential risks of financial penalties and reputational damage. For example, California’s SB 253 requires certain public and private U.S. companies that “do business in California” to make detailed greenhouse gas emissions disclosures backed by third-party assurance. Mandatory carbon emissions disclosures like California’s are also developing alongside stricter energy efficiency and emissions standards for buildings, such as the EU’s Energy Performance of Buildings Directive (EPBD), New York City’s Local Law 97, and DC’s Building Energy Performance Standards (BEPS). These and other laws and standards applicable to the CRE industry are creating a patchwork of requirements for quality and auditable data. This will continue to challenge members of the regulated community to build robust yet adaptable data infrastructure, aligned with and integrated into their broader governance and risk management frameworks, to achieve compliance, drive strategy, and reduce risk.
These considerations for the CRE industry are part of macro trends related to ESG and sustainability in 2026, which are discussed in our related alert on ESG & Sustainability in 2026: Twists, Turns, and Trends.
This article is one of several insights featured in Clark Hill’s 2026 Commercial Real Estate Market Update. Explore the full series for timely insights on legal, regulatory, and market developments impacting the CRE industry.
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