Environmental, Social and Governance (ESG) considerations are becoming increasingly influential across the commercial property sector. Regulatory expectations are evolving, investor scrutiny is rising, and environmental performance is playing a greater role in transaction due diligence, asset valuation and portfolio management.
Earlier this year, our white paper Navigating the 2026 Regulatory Landscape in Commercial Property Law explored how ESG and green lease reform are becoming increasingly important considerations for commercial property professionals.
Since publication, further developments have reinforced the direction of travel. ESG is no longer solely a compliance consideration; it is becoming a core component of risk management, investment decision-making and long-term portfolio strategy.
Chris Loaring, Managing Director at Landmark Information, shares his perspective on the latest developments and explores how environmental risk is becoming a more significant consideration across the commercial property sector.
Recent developments in ESG and environmental risk
The most notable development has been the UK Government’s continued reform of the Energy Performance of Buildings (EPB) regime. In March 2026, the Government published a partial response to its consultation on EPC reform, confirming that regulations will be introduced to support a new generation of EPCs focused on providing more meaningful information about building performance. The reforms are intended to improve how energy performance is measured and communicated, reflecting a broader policy objective of supporting the UK’s Net Zero ambitions.
Climate due diligence is becoming a business-critical exercise
Perhaps the most significant shift since publication is the growing recognition that climate change due diligence has moved beyond regulatory compliance and into the mainstream of portfolio risk management.
Research undertaken within the property sector indicates that climate risk information is now regarded by many professionals as being as important as traditional due diligence factors when assessing property transactions. Increasingly, organisations are evaluating both physical climate risks (such as flooding, heat stress, wildfires and subsidence) and transition risks.
This change is also being driven by ESG reporting obligations and investor expectations. Climate resilience, asset adaptability and environmental performance are now increasingly viewed through the lens of financial materiality. Organisations are beginning to recognise that poorly performing buildings may create future liabilities through reduced let-ability, increased capital expenditure requirements and diminished asset values.
As a result, climate due diligence is becoming more integrated into ongoing portfolio management. Rather than assessing environmental issues only when a transaction arises, many organisations are moving towards continual monitoring of energy performance, climate exposure and decarbonisation pathways across entire portfolios, as and when our climate continues to change. This reflects a broader evolution in ESG from a reporting exercise towards a strategic risk management function.
Earlier access to environmental information is becoming essential
A second major trend is the growing emphasis on providing environmental information earlier in the commercial property lifecycle.
Historically, environmental and climate-related risks have often been assessed relatively late in transaction processes, typically as part of formal due diligence exercises. However, there is increasing recognition that the late identification of environmental issues can have wider implications for acquisitions, disposals, leasing arrangements, asset management strategies and investment decisions.
This shift is reflected in proposed reforms to EPC requirements. The Government has confirmed its intention to require EPC information at an earlier stage in the marketing process, reinforcing the principle that prospective purchasers, occupiers and investors should have access to key environmental information before making significant commercial decisions.
Looking ahead
Environmental risk is no longer viewed solely through the lens of compliance. As regulatory requirements evolve and climate-related considerations become more financially material, organisations are increasingly embedding environmental data and risk assessments into investment, acquisition and portfolio management decisions.
For commercial property professionals and their advisers, the challenge will be keeping pace with changing expectations while ensuring environmental information is available early enough to support informed decision-making. Those with access to reliable data, robust due diligence processes and clear governance frameworks will be better placed to manage risk and respond to future regulatory change.
For a broader view of the reforms shaping the commercial property sector in 2026 and beyond, including ESG, planning, building safety and Land Registry transformation, download our latest white paper, Navigating the 2026 Regulatory Landscape in Commercial Property Law.
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