ERI’s Comprehensive Service Offerings
Physical Climate Risk Assessment
ERI’s Physical Climate Risk Assessment is an evaluation aimed at understanding the potential climate-related risks associated with a property. It includes six risk categories: heat, precipitation, drought, wind, fire, and flood. The level of risk related to each risk category will be identified for the property. The Climate Risk Assessment also includes the completion of a Standard Flood Hazard Determination Form in accordance with the Federal Emergency Management Agency (FEMA). This review will determine if the property is situated within a flood zone and assesses the necessity of flood insurance, which is required by most underwriting departments. An ERI Environmental Professional will analyze this data and summarize the findings and potential climate-related risks to the collateral property. If appropriate, ERI will also suggest mitigation measures to maintain or enhance the real estate’s resilience against these risks over time.
Lender Sustainability Services
ERI is partnering with The EI Group, a multidisciplinary environmental engineering, occupational safety and health consulting firm whose primary focus is aimed at supporting Fortune 1000 corporations involved in manufacturing, energy production and transportation services. This initiative is being driven by a standardized climate disclosure rule anticipated for release by the Securities and Exchange Commission (SEC) in early 2024. As a result of this anticipated rule by the SEC, companies targeted for commercial lending will be required by those publicly traded financial institutions which extend loans, to provide corporate climate impact data on their ESG practices and carbon footprint to better evaluate long-term lending risks. As the demand for financial institutions to take accountability for their carbon footprint intensifies, there is a growing need for institutions to assess the ESG practices of their clients. ERI and EI experts are here to help financial institutions build and implement a standardized system so that institutions can confidently assess their potential clients’ ESG activities to then be able to report on their own.
Environmental Screen with Risk Rating
An Environmental Screen is used to determine if the subject property or adjacent properties are identified on an environmental regulatory database report. ERI reviews an ⅛-mile regulatory database report and provides an Environmental Professional Risk Rating. The typical turn time for the Environmental Screen is two business days. ERI’s clients use this due diligence product as a screening tool for new loans with relatively low loan amounts and for renewals to determine if additional environmental due diligence is warranted.
Environmental Screen Plus
The Environmental Screen Plus is similar to the Environmental Screen, as it includes a ⅛-mile radius report and Environmental Professional Risk Rating, but the Environmental Screen Plus also includes a review of readily available online historical aerial photographs. This environmental due diligence product is used to determine if the subject property or adjacent properties are identified on a regulatory database report and as a screening tool for low-risk collateral properties with relatively low loan amounts. However, the Environmental Screen Plus is also a great tool for evaluating the environmental risks associated with existing collateral, as it can be used to determine if any new environmental regulatory listings of concern have been identified since loan origination.
Regulatory Database Report Review
A Regulatory Database Report Review is intended to determine if the collateral property or any adjacent properties have been listed on any federal, state or local environmental databases. The regulatory database report is the same regulatory database report that is included in a Phase I report, extending to a 1-mile radius and detailing the environmental listings for the subject site and surrounding properties. An ERI Environmental Professional will review this database report as well as online historical aerial photographs and summarize the findings and potential impacts to the collateral property in an Environmental Review Memorandum. The typical turn time for a Regulatory Database Report Review is 3 business days. Our clients use this due diligence product on low risk properties for new loans as well as renewals. In many cases, a client will request a Regulatory Database Report Review along with review of a dated Phase I report in lieu of ordering a new Phase I report, saving the borrower both time and money.
SBA Approved Records Search with Risk Assessment (SBA-Compliant RSRA) – Desktop Review
Although the Records Search with Risk Assessment was developed by the Small Business Administration (SBA), it is one of the most widely used due diligence products in commercial lending by banks of all sizes for both SBA and non-SBA transactions. The SBA-Compliant RSRA includes a review of at least two historical sources (aerial photographs, city directories, fire insurance maps), a regulatory database report, an interview with a site contact (if desired by the client), and a Risk Determination by an ERI Environmental Professional. The SBA-Compliant RSRA is prepared in accordance with the requirements set forth in SBA SOP. These reviews are typically performed on commercial loans with low risk. SBA-Compliant RSRA reviews include BOTH purchase of the data and a thorough written review by an Environmental Professional. An SBA-Compliant RSRA is a comprehensive site screening tool that provides a lender with a site history along with known current and past regulatory issues without the time and expense of a site inspection.
Third-Party Environmental Report Review (Phase I Reviews)
The most common method of identifying environmental risk on a collateral property is through traditional site-specific investigations such as Phase I & Phase II Environmental Site Assessments, Remedial Action Reports, and regulatory file reviews. ERI’s Environmental Professionals have extensive experience in environmental assessments, remediation activities, regulatory requirements, and financial services. ERI staff can communicate regulatory and environmental risks clearly so that loan officers, syndication partners, and credit officers can make prudent business decisions. ERI will review the Phase I report along with any other available environmental reports and prepare an Environmental Review Memorandum, which clearly summarizes the review findings, identifies environmental risks, and provides recommendations for additional information and/or assessment when appropriate. Our recommendations will always be consistent with the client bank’s risk tolerance as well as industry best practice.
Environmental Risk Management Policy Development
A sound Environmental Risk Management Policy is the first step in providing a roadmap to understanding and mitigating environmental risk. Over the past 25 years, ERI has assisted numerous lenders with development of Environmental Risk Management Policies and Procedures. ERI provides technical expertise to develop and amend policy/procedures to suit the client bank’s risk tolerance. Our recommendations related to policy/procedures development will always be consistent with industry best practices due to our considerable experience with banks of all sizes and geographic footprints. A comprehensive Environmental Risk Management Policy, combined with customized due diligence products allows banks to manage environmental risk in a cost‐effective and efficient manner.
Policy Implementation & Maintenance
ERI assists the client in rolling out the bank’s policy and procedures to lenders and credit staff. ERI’s knowledge and expertise helps client banks manage and implement their environmental risk policies and programs, saving time and expenses while maintaining business goals.
Multiple Site Portfolio Reviews
ERI provides many lenders with additional third-party capacity to quickly process large portfolio reviews. Our staff is accustomed to meeting tight deadlines with the urgency and dedication needed to process large portfolios in a thorough and timely manner. The collateral detail and environmental issues are communicated in a format which enables lenders to understand the collateral risk and meet loan closing deadlines.
Commercial Appraisal Reviews
ERI has partnered with qualified appraisers who will conduct independent commercial appraisal reviews to assess compliance with the Federal Reserve appraisal regulations and guidelines as well as professional standards. Qualified appraisers will conduct independent commercial appraisal reviews to assess compliance with the Federal Reserve appraisal regulations and guidelines as well as professional standards.
Regulatory Agency Liaison
Considering acquiring a property with known contamination?
Want to know more about available funding or incentives?
ERI’s regulatory agency liaison support services can review historical property documentation, conduct a gap analysis to determine if further assessment is warranted, contact the appropriate regulatory authority on your behalf, procure bids from qualified Environmental Professionals and more! Along with ongoing client support during the entire process.
Environmental Risk Training
From current environmental topics to internal policy questions, ERI provides bank staff with a wide variety of training programs in the environmental risk management field. This training can be customized to address any topic of interest.
Complimentary Client Support
ERI’s client-first approach includes numerous complimentary services, such as creating, reviewing, and updating Environmental Risk Management Policies and keeping clients informed about regulatory updates and best practices in the industry. We also serve as a direct extension of the bank’s Environmental Risk Management Department by providing policy training and serving as an ongoing resource to credit, appraisal and environmental risk managers and loan officers.