Press Release
FOR IMMEDIATE RELEASE
December 2024

Mortgage Lenders: The Missing Link in Decarbonizing America’s Buildings
New Report Unveils Untapped Market Opportunities for Green Financing in Real Estate

New York, NY – A groundbreaking report, Banking on Climate: The Mortgage Lending Opportunity in Building Decarbonization, was released today, 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, and policymakers 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.

“The window for action is now,” said Jamie Horton, co-author and Director of Special Projects at NYCEDC. “Mortgage lenders have the tools and influence to accelerate decarbonization and reshape the market. This report shows them how.”

"In order to build a robust green economy and pioneer modern-day climate innovation, it is essential to bring public and private partners to the table to find the best ways to meet the city's pressing climate goals," said New York City Economic Development Corporation (NYCEDC) President & CEO Andrew Kimball. "This paper speaks to the value of public-private cross-collaboration and outlines clear steps for how we activate lenders to bring additional capital to building decarbonization and why New York City is the perfect proving ground to jump start those investments. Thank you to our partners at NYU Stern Center for Sustainable Business and NYU Stern Chen Institute for Global Real Estate Finance for co-authoring this report and helping NYCEDC create a cleaner, greener city for all New Yorkers."

"Our research and stakeholder engagement demonstrates a clear win-win opportunity for mortgage lenders to support the decarbonization of our city's built environment,” said Marianna Koval, report co-author and Director of the Invest NYC SDG Initiative at NYU Stern CSB. “We hope this provides a valuable resource and pathway to action. We need bank leadership. The future depends on it."

“The commercial real estate industry is emerging from a period of significant disruption in access to capital and is rightly focussed on investments that enhance the contribution of our buildings to the economy and our communities,” said Sam Chandan, Founding Director of the NYU Stern Chen Institute. “Investments in building decarbonization are a priority in this renewal of the built environment, and depend critically on the availability of rigorously underwritten financing.”    

“This report shows Local Law 97 created a massive unrealized opportunity for banks and financial institutions,” said Mayor’s Office of Climate & Environmental Justice Executive Director Elijah Hutchinson. “If they can’t move the building decarbonization financing market forward, they risk missing out on a multi-billion dollar industry. The City will continue to push for new resources to help with Local Law 97 compliance like updating the NYC Accelerator, the J-51 tax abatement, and the creation of the GreenHOUSE Fund, along with additional State and utility resources, to support NYC's rapid green economy growth.”

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.

Find the full report here.

For media inquiries, contact:
Alison Berg
NYU Stern CSB
Email: alison.berg@stern.nyu.edu

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.  

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.