Environmental Compliance and Climate Resilience: New Standards for Property Due Diligence 

When you’re acquiring commercial real estate, there’s more to evaluate than just location, leasing potential, or the building’s condition. Today, environmental compliance and climate resilience are becoming non-negotiable parts of the due diligence process. Environmental Compliance and Climate Resilience

It’s no longer just about identifying past contamination or regulatory issues. Buyers, lenders, and insurers want to know how a property will hold up in the face of floods, wildfires, and other natural hazards. They also want assurance that the asset won’t become a liability down the line due to environmental exposure or changing climate risks.

To stay ahead, real estate professionals need to understand how property assessments are evolving, what new standards like ASTM E3429-24 mean, and how to build a due diligence process that protects both short-term transactions and long-term asset value.

What is Changing: From Traditional Due Diligence to Climate-Informed Standards

Traditional Environmental Due Diligence

Historically, due diligence in real estate focused on identifying known or potential environmental liabilities tied to the property. This typically involved assessments for soil or groundwater contamination, presence of hazardous materials, past industrial uses, migration risks from neighboring sites, vapor intrusion, underground storage tanks, and compliance with environmental regulations.

One of the earliest formal tools used is the ASTM E1527 standard. It is commonly applied to perform a Phase I Environmental Site Assessment (ESA). The Phase I ESA plays a central role in evaluating a property’s environmental history and identifying recognized environmental conditions (RECs) before acquisition.

When a Phase I ESA identifies potential issues, parties may proceed to deeper investigation. For example, a Phase II ESA may be needed, involving soil, groundwater, vapor, or material sampling to confirm contamination and assess risks.

This approach remains fundamental to environmental compliance and remains a core part of real estate due diligence.

Why Traditional Due Diligence Is No Longer Enough

Over the last decade, the scale and frequency of climate-driven hazards such as flooding, wildfires, hurricanes, heat stress, severe storms, and droughts have increased. These pose growing physical and financial risks to properties beyond traditional contamination or compliance liabilities.

Moreover, environmental regulations and investor expectations are evolving. Real estate stakeholders including investors, lenders, insurers, and developers are demanding more rigorous assessments that account for both legacy environmental compliance and future climate vulnerability.

As a result, a new generation of standards and best practices has emerged. These bridge historical environmental risk with forward-looking climate resilience.

The New Standard: Integrating Climate Resilience into Due Diligence

ASTM E3429-24: Property Resilience Assessment (PRA)

In October 2024, ASTM International published E3429-24. This standard guide outlines how to conduct a Property Resilience Assessment (PRA). It provides a structured, systematic, and scalable framework for assessing a property’s resilience against natural hazards and climate-related risks.

The PRA is designed to complement, not replace, traditional due diligence standards like Phase I ESA or building condition assessments.

How PRA Works: Three-Stage Approach

ASTM E3429-24 follows three stages: hazard identification, risk evaluation, and resilience planning.

• Hazard Identification: Identify natural hazards that may affect the property, such as flooding, sea-level rise, storm surge, hurricanes, wildfires, earthquakes, extreme temperatures, and drought.
• Risk Evaluation: Assess the property’s vulnerability to those hazards. This includes exposure, structural and operational resilience, and potential functional disruption under hazard scenarios.
• Resilience Planning: Propose mitigation strategies such as elevating systems, adding flood barriers, using fire-resistant materials, or redesigning vulnerable infrastructure.

This results in a forward-looking analysis. It helps stakeholders understand not only current environmental compliance, but also how the property may perform in a changing climate.

Why PRA Matters

• Holistic view of risk: PRA combines historical environmental issues with future hazard projections.
• Better decision-making: PRA informs investors, lenders, and insurers about risks and resilience.
• Supports compliance and disclosure: PRA helps meet evolving regulatory and ESG standards.
• Protects long-term value: Resilient properties are less exposed to disruptions and more likely to maintain value.

A Modern Property Due Diligence Checklist

Today, a full due diligence process should include both traditional environmental steps and a climate resilience assessment.

1. Environmental Compliance Review

• Conduct a Phase I ESA to evaluate historical use, hazardous materials, underground storage tanks, and regulatory records.
• If RECs are identified, proceed with Phase II ESA for detailed testing.

2. Preliminary Environmental Risk Screening

• Use a risk screen to flag potential contamination, flood zones, nearby industrial facilities, and other hazards early.

3. Property Resilience Assessment (PRA)

• Apply ASTM E3429-24 to assess exposure to natural hazards and structural vulnerability.
• Evaluate how future events like floods or wildfires might impact property operations.

4. Resilience Planning

• Based on PRA findings, develop mitigation strategies.
• Consider building upgrades, drainage improvements, or changes in land use if necessary.

5. Contractual Protections

• Include environmental and resilience terms in the purchase agreement.
• Define rights, remediation obligations, and conditions for proceeding with the acquisition.

6. Long-Term Monitoring

• Reassess risk periodically as hazard maps and climate projections evolve.
• Maintain compliance records, maintenance logs, and documentation of upgrades.

Why This Shift Matters

Reducing Risk and Liability

Ignoring environmental and climate risks can expose buyers to major liabilities. Clean-up costs, insurance issues, and future regulation can create financial burdens. A comprehensive due diligence process reduces those risks.

Protecting Value

Properties that are compliant and resilient are more likely to maintain value, attract investors, and remain operational during extreme events. These qualities improve insurability and marketability.

Supporting ESG and Regulatory Goals

Resilience assessments support environmental, social, and governance (ESG) reporting. They also help meet new disclosure and compliance requirements as climate risk becomes a regulatory priority.

Conclusion Environmental Compliance and Climate Resilience

Environmental compliance and climate resilience are no longer separate concerns. They are both essential elements of modern property due diligence. With updated standards like ASTM E3429-24, buyers can evaluate properties more effectively. They can protect their investments from known liabilities and prepare for future challenges.

By integrating traditional assessments with resilience strategies, investors can navigate acquisitions with confidence. In today’s world, protecting property value means planning for the climate conditions of tomorrow.

If you need any assistance with Environmental Compliance and Climate Resilience in Property Due Diligence, please email info@rsbenv.com. We look forward to hearing from you.