City Life Org – Mortgage Lenders: The Missing Link in Decarbonizing America’s Buildings

Photo Courtesy of NYCEDC

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A groundbreaking report, Banking on Climate: The Mortgage Lending Opportunity in Building Decarbonization, was released, showcasing the immense potential for mortgage lenders to drive the transition to a greener built environment. Co-authored by experts from NYC Economic Development Corporation (NYCEDC), the NYU Stern Center for Sustainable Business (NYU Stern CSB), and the NYU Stern Chao-Hon Chen Institute for Global Real Estate Finance (NYU Stern Chen Institute), the report summarizes the findings and recommendations from the Building Decarbonization Finance Task Force – a group of mortgage lenders, building owners, policymakers, and non-profits convened by NYCEDC, NYU Stern CSB, and the NYU Stern Chen Institute to catalyze financing solutions to fund green building retrofits. The task force recommendations provide actionable strategies for lenders to seize a $5.9 trillion market opportunity while meeting urgent climate goals.

With buildings accounting for 31% of U.S. greenhouse gas emissions, the real estate sector represents an overlooked giant in the fight against climate change. As the primary financiers of real estate, mortgage lenders are uniquely positioned to catalyze decarbonization by embedding sustainability into lending practices. This report provides a roadmap for banks, policymakers, and investors to unlock this potential.

Key Findings

• Green Lending: A Market-Ready Solution – By 2030, $12-$15 billion in building retrofits will be required annually in NYC alone to meet emissions reduction targets under Local Law 97. The report shows how NYC will be a critical proving ground to demonstrate scalable national solutions.
• Regulations Are Creating Urgency – Recent legislation, including California’s Climate Corporate Data Accountability Act and NYC’s Local Law 97, are pushing financial institutions to disclose and reduce the carbon footprint of their portfolios.
• Economic Incentives Abound – Green-certified buildings offer higher rents (6%), sales premiums (7%), and lower vacancy rates compared to their traditional counterparts, proving that sustainability investments deliver returns.

Recommendations for Mortgage Lenders

1. Assess Portfolios – Measure emissions in existing mortgage portfolios to identify high-impact decarbonization opportunities.
2. Develop Green Products – Offer loans tailored to efficiency and electrification upgrades, incorporating incentives such as reduced interest rates.
3. Standardize Practices – Collaborate with policymakers to establish consistent metrics for building performance and streamline loan applications for green improvements.

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Supported by contributions from Urban Green Council, the report emphasizes collaboration across stakeholders, from regulators to building owners, to create a vibrant ecosystem for green lending. The study also highlights NYC as a model for scaling these strategies nationwide.

A Call to Action

The report urges banks, policymakers, and building owners to act decisively. By aligning financial incentives with sustainability goals, the mortgage industry can lead the way in reducing the carbon footprint of America’s buildings while unlocking significant economic opportunities.

To download the full report, visit edc.nyc/research-insights/banking-on-climate.

About NYCEDC
New York City Economic Development Corporation is a mission-driven, nonprofit organization that works for a vibrant, inclusive, and globally competitive economy for all New Yorkers. We take a comprehensive approach, through four main strategies: strengthen confidence in NYC as a great place to do business; grow innovative sectors with a focus on equity; build neighborhoods as places to live, learn, work, and play; and deliver sustainable infrastructure for communities and the city’s future economy. To learn more about what we do, visit us on Facebook, Twitter, LinkedIn, and Instagram.

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About NYU Stern Center for Sustainable Business
The NYU Stern Center for Sustainable Business (CSB) was founded with the vision of a better world through better business. Through practical research, innovation in education, and corporate engagement, CSB aims to unleash the transformative potential of business to solve societal challenges at speed and scale and equip businesses with the tools to embed sustainability into their operations and financial decision-making, advancing practices that benefit society and the environment.

About NYU Stern Chao-Hon Chen Institute for Global Real Estate Finance
The Chen Institute advances our understanding of real estate and the built environment through groundbreaking scholarship, applied research, and teaching. Home to the Center for Real Estate Finance, as well as initiatives addressing issues ranging from data science to real estate in emerging economies to the critical challenge of climate change and the built environment, the Institute and its affiliated faculty work to address the most significant questions facing the industry today and into the future.