The built environment encompasses all human-made spaces and structures where people live, work, and move. On September 19, at the American Bar Association (“ABA”) Business Law Section Fall Meeting, a CLE program presented by the Corporate Sustainability Law Committee explored how evolving legal, financial, and insurance frameworks are shaping physical structures, land use, systems, and services for sustainable real estate development.
The panelists for the CLE program—Elizabeth Beardsley with the U.S. Green Building Council, Jenna Kirkpatrick Howard with Lockton, Amanda Schermer MacVey with Venable LLP, and Elizabeth Yazgi with LSTA, Inc.—addressed sustainability considerations for new and existing buildings, financing mechanisms for energy efficiency and decarbonization retrofits and new builds, risk mitigation strategies amid climate resilience considerations, and practical solutions to implementation barriers. Attendees gained insights essential for competence in advising clients on emerging standards, legal requirements, and best practices for property ownership and the future of our nation’s buildings, parks, transportation systems, bridges, and other human-made spaces and structures that shape how people live, work, and recreate.
Howard began the program by offering data and statistics on the growth in number, severity, and cost of climate-related events. She noted property insurers have closely monitored the financial and economic impacts of changing climate and weather, with the 2020s off to an ominous start. She reported that there was $89 billion in average annual incurred property insurance losses between 2020 and 2023 and twenty-seven events in the United States alone in 2024 that caused at least $1 billion in economic damage with combined disaster costs of $182.7 billion. She warned that climate-related disasters are projected to cause economic losses of $12.5 trillion worldwide by 2050.
MacVey discussed the role of attorneys in guiding clients through evolving laws, codes, and regulations relating to the construction and operation of buildings, which surprisingly account for approximately 33 percent of carbon dioxide emissions. MacVey noted the expanding role of local building and energy codes and explained the ethical standards adopted by industry organizations for design professionals and engineers. She touched upon the impact of the ABA’s House of Delegates approval of Resolution 513 on August 5, 2024, regarding the importance of incorporating sustainability into the practice of law. She also spoke of the Building Code Adoption Tracking (“BCAT”) program of the Federal Emergency Management Agency (“FEMA”), which analyzes adoption of provisions related to natural hazard resistance, and discussed the significance of residential and commercial energy codes, especially in states that enacted significant legislation in 2024 and 2025 to advance sustainability objectives such as California, Hawaii, Maine, New York, Florida, and Vermont. MacVey insisted that business lawyers with clients in real estate development or use in these states in particular must have some level of competence in this rapidly changing landscape.
Beardsley described the range of policies for high-performing green buildings, including green building adoption for public buildings as well as incentives and permit conditions for private buildings, and how state and local governments use certifications to implement their goals for the built environment. She highlighted certain financial products for deep energy retrofits, efficiency upgrades, and new sustainable developments. She touched upon the evolution of LEED standards for sustainable building, and the latest version, LEED v5, which requires that all building projects conduct a climate resilience assessment. She also provided the essential concepts of green financial products such as Property Assessed Clean Energy (“PACE”) financing, energy performance contracts, and green mortgages that deliver both environmental benefits and economic returns. In a world of political backlash to environmental, social, and government (“ESG”) practices, Beardsley explained how the drivers of sustainable investing, climate risk, resource scarcity, and social resilience remain intact. As Triodos Investment Management put it in one of its commentary pieces, the “ESG backlash doesn’t make economic sense”—the backlash is political, not financial.
Yazgi discussed the factors driving financial market participants’ interest in sustainable debt financing and provided a walkthrough of the LSTA’s “framework documentation” governing the critical sustainable lending instruments available in the market—namely, sustainability-linked loans and use-of-proceeds, or thematic, instruments (“green,” “social,” and “transition” loans). She detailed how ESG products fit within the broader financial markets, noting the continued interest by lenders and investors in projects that contribute to specific social or environmental objectives and that direct capital towards sustainable investments. She also highlighted the inaugural Transition Loans Guide from the LSTA, Loan Market Association (“LMA”), and Asia Pacific Loan Market Association (“APLMA”), which reflects the advance of transition instruments. The latter have become increasingly adopted as entities in high-emitting sectors seek financing to transition from high-carbon to low-carbon operations and develop business models that contribute meaningfully to the decarbonization of the real economy. She closed by noting that, despite recent regulatory rollback and government retreat from ESG priorities, sustainable finance remains an important opportunity for companies and investors and illustrates that lending can be a critical source of capital.
The panelists each noted that all those involved in real estate development and use (and the lawyers that advise them) are adjusting to the legal and regulatory changes prompted by the evolving risk of weather-related disaster events. Industry standards are shifting toward strategic foresight, anticipating climate-related challenges and disruptions, and allocating resources for long-term value creation. Strategies for overcoming barriers facing sustainable projects—whether in financing, legal compliance, or risk mitigation—are essential. There is an emerging transformation of industry standards in our built environment that will result in changes to legal standards. Whether we look at soft or hard law, sustainability issues are core to existing and future real estate and relevant to multiple business units including, but not limited to, finance, procurement, and supply chains.
Howard ended the program by discussing the current state of the insurance marketplace for real estate development and use, changes to modeling based on the rapid pace of climate change, and how volatile insurance rates impact projects. She shared examples of how insurers incentivize property owners to sustainable investments. The session wrapped up with risk considerations factors when considering a location for real estate development.
Not touched upon during the panel discussion because of lack of time but also relevant given the program’s content is the pressing need for companies to prepare to protect their employees in the face of a climate-related crisis. Two pending litigations—Elijah Johnson et al. v. Mayfield Consumer Products, filed in the Graves County Circuit Court in Kentucky on December 16, 2021, and Peterson Family v. Impact Plastics, Inc. and Gerald O’Connor, filed in the Tennessee State Court on October 14, 2024—allege the defendant employers denied employees’ pleas to evacuate during severe weather warnings, with tragic results. Best practices now clearly require companies to not only adopt a written emergency plan but also approach climate-related risks as triggering Occupational Safety and Health Administration (“OSHA”) requirements to maintain a safe workplace.
While no one can predict when known regional threats such as hurricanes or wildfires will strike, employers can certainly plan for what to do if such crises unfold. Preparing for climate-related disasters will mitigate against legal risk, assure (as well as possible) employee safety, foster communication, and clarify realistic compensation and leave expectations. The climate-related emergency plan should address at a minimum: (i) clear and direct communication prompts; (ii) mass alert systems via text, email, or phone, if feasible; (iii) where employees should shelter physically in the workplace during a disaster if evacuation is not possible; (iv) what safety protocols are in place for on-site or essential workers; (v) when and how business operations will close or reopen; and (vi) training with emergency drills or simulations. OSHA’s How to Plan for Workplace Emergencies and Evacuations is a great resource.
Note that, under the Fair Labor Standards Act, nonexempt employees must be paid for hours actually worked. If employees are at work but are unable to work, like in the event of a power outage, pay is still required. If employees are sent home, assuming no employment-related tasks are performed at home, pay is not required. Exempt employees must receive their full salary if they work any part of the week. Employees may be required to use paid time off during closures, but such a policy should be in place and clearly communicated to employees in advance if the employer hopes to avoid confusion and complaints. Disasters are unpredictable, but violations of workplace safety and compensation statutes despite known severe weather risks are.
While the term “climate change” may be considered polarizing or politically charged, businesses and the attorneys that represent them must address the reality of changes in climate patterns and the growing number of severe climate-related events. Like all other foreseeable business-related risks, all applicable federal, state, and local laws must be reviewed in the due diligence assessment of such risk.
This article is related to a CLE program titled “Sustainability in Real Estate: State, Local, and Private Requirements and the Future of the Built Environment” that took place during the ABA Business Law Section’s 2025 Fall Meeting. To learn more about this topic, listen to an audio recording of the program, free for members.
