LBR1: Sustainability Due Diligence
Maximum Score
6 points
Prefill
Not eligible
Validation
Evidence and other answer are manually validated
Does the lender evaluate the borrower/sponsor based upon a Sustainability Due Diligence Questionnaire?
Assessment Instructions
Intent: What is the purpose of this indicator?
The focus is on the lender process to better understand the borrower/sponsor risk profile by using a Sustainability Due Diligence Questionnaire. In case a proprietary questionnaire is used, Participants should indicate which sustainability metrics are used to assess the borrower/sponsor.
Input: How do I complete this indicator?
Select Yes or No. If Yes, please select all applicable checkboxes.
Other: Answers provided under 'Other' must be outside the options listed in the indicator to be valid.
If a Proprietary questionnaire is used, the indicator contains three additional answer options:
Under 'Borrower-specific risks' participants should indicate the risk group reviewed.
Under 'Sustainability-related actions' participants should specify metric(s) related to the borrower/sponsor's sustainability actions, objectives and/or targets.
Under 'Sustainability track record' participants should indicate which (asset-level) sustainability metrics are being tracked.
Terminology
Community engagement
Community engagement refers to the communication, interaction, and formation of relationships between the entity and those groups.
Environmental fines and/or penalties
Sanctions resulting from an illegal act, which directly harms the environment.
ESG Integrated Disclosure Project (ESG IDP)
An industry initiative bringing together leading lenders in the private credit and syndicated loan markets to improve transparency and accountability. The goal is to promote greater harmonisation and consistency of disclosure of key ESG indicators by borrowers in private credit and syndicated loan transactions.
Misconduct
Unethical behavior, and more specifically, poor stewardship of environmental, social or governance issues, which may or may not result in legal action.
MISMO Commercial Green Borrower Questionnaire
This industry resource standardizes questions for commercial lenders to ask borrowers when applying for a commercial mortgage loan. These standardized questions are designed to assist lenders in gathering borrower information when originating, underwriting or servicing commercial loans in order to increase borrower participation in ESG.
Sustainability commitment
Long and/or short term aims connected to specific metrics/impacts made by the lender.
Sustainability objectives
Strategic priorities and key topics to improve the management of sustainability issues.
Sponsor
The entity that provides equity to a Borrower in a real estate finance transaction.
Sustainability performance
Indicators of environmental, social, or governance, management, implementation, or performance.
Sustainability track record
Data that reflects the sustainability performance of a borrower or sponsor.
Validation: What evidence is required?
Evidence
The evidence provided will be subject to manual validation.
Document upload or hyperlink Two separate uploads are required. If a hyperlink is provided, ensure it is active and that the relevant content can be accessed within two steps. Multiple documents may be uploaded for each upload type, as long as it is clear where the relevant information can be found.
Evidence upload 1: Proprietary questionnaire The uploaded questionnaire must be the lender’s own Sustainability Due Diligence Questionnaire used to evaluate borrowers or sponsors. The evidence must clearly show that the questionnaire includes the element(s) selected in the checkboxes for this question. It must be possible to locate the relevant questions or sections that correspond to the selected elements. A high level policy statement is not sufficient without the actual questionnaire content.
Minimum requirements
The document must be identifiable as a borrower/sponsor due diligence tool and not only an internal strategy document.
The selected elements must be explicitly covered in the questionnaire, either as standalone questions, section headers, or required disclosures.
If the lender uses separate modules, evidence must include the full set of modules needed to demonstrate coverage of the selected elements.
Evidence upload 2: Third party questionnaire The uploaded document must be an existing third party Sustainability Due Diligence Questionnaire used to assess borrowers or sponsors. Evidence must make clear it is third party, for example the provider name and branding, licensing language, or a link to the provider source.
Minimum requirements
The questionnaire must assess both the borrower/sponsor and the asset.
Coverage must span multiple aspects consistent with the themes in this question, including borrower/sponsor risks, sustainability actions, and sustainability track record, as well as asset related sustainability metrics.
A general sustainability survey or scorecard is not sufficient unless it clearly functions as a borrower/sponsor due diligence questionnaire and includes asset level assessment components.
Examples of acceptable evidence Proprietary borrower/sponsor due diligence questionnaires, lender due diligence templates used in underwriting, third party DDQ tools from recognized providers. Sensitive information may be redacted as long as the structure and relevant sections remain clear.
Scoring
Scoring: How does GRESB score this indicator?
Scoring for this indicator is based on the implementation of a sustainability Due Diligence Questionnaire to evaluate borrowers/sponsors.
The scoring of this indicator is equal to the sum of the fractions assigned to the selected options and respective sub-options, multiplied by the total score of the indicator.
Evidence: The evidence is manually validated and assigned a multiplier, according to the table below. The evidence must support the validation requirements.
If any requirements are not met, the evidence may be partially accepted or not accepted, depending on the level of alignment with the requirements.
Accepted
2/2
Partially Accepted
1/2
Not Accepted
0
Other: The 'Other' answer is manually validated and assigned a score which is used as a multiplying factor, as per the table below:
Accepted
1/1
Not Accepted
0
Duplicate
0
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