Health Safety and Environmental (HSE)

Nine Steps Toward Environmental Due Diligence

It can be challenging to understand how certain environmental risks can impact commercial real estate deals. Some risks can have major consequences and may increase the chances of acquiring property with substantial environmental liabilities or cause the transaction to fail.

To ensure that due diligence provides a comprehensive evaluation of potential environmental risks, companies contemplating the acquisition of commercial property should consider the following nine steps as part of the due diligence process:

  1. Ensure your consultants use industry standards and best practices to assess environmental risk (ASTM E1527-13 standard to conduct Phase I ESAs).
  2. Include environmental experts on your due diligence team from the start.
  3. Retain consultants with working knowledge of area-specific environmental issues.
  4. Physically inspect the property.
  5. Assess the current regulatory compliance status of the property.
  6. Identify applicable regulatory guidelines used as thresholds of contamination.
  7. Assess environmental risks and set thresholds.
  8. Seek indemnity agreements with the sellers.
  9. Transfer environmental risks by using Environmental Liability Transfers (ELTs).
Learn More Here

Get more details on some of the emerging exposures facing today's real estate companies and how to manage them in our advisory "Environmental Due Diligence — 9 Steps Companies Should Take to Effectively Manage Environmental Risks in Commercial Real Estate Deals".

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