Underwriting environmental risk : an analysis of current practices among lending institutions
Thesis (S.M.)--Massachusetts Institute of Technology, Dept. of Architecture, 1998.
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| Format: | Thesis |
| Language: | eng |
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Massachusetts Institute of Technology
2012
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| Online Access: | http://hdl.handle.net/1721.1/69752 |
| _version_ | 1811069283068805120 |
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| author | Russo, Stephan J. (Stephan Joseph), 1969- |
| author2 | Lawrence S. Bacow. |
| author_facet | Lawrence S. Bacow. Russo, Stephan J. (Stephan Joseph), 1969- |
| author_sort | Russo, Stephan J. (Stephan Joseph), 1969- |
| collection | MIT |
| description | Thesis (S.M.)--Massachusetts Institute of Technology, Dept. of Architecture, 1998. |
| first_indexed | 2024-09-23T08:08:38Z |
| format | Thesis |
| id | mit-1721.1/69752 |
| institution | Massachusetts Institute of Technology |
| language | eng |
| last_indexed | 2024-09-23T08:08:38Z |
| publishDate | 2012 |
| publisher | Massachusetts Institute of Technology |
| record_format | dspace |
| spelling | mit-1721.1/697522020-07-23T14:15:50Z Underwriting environmental risk : an analysis of current practices among lending institutions Russo, Stephan J. (Stephan Joseph), 1969- Lawrence S. Bacow. Massachusetts Institute of Technology. Department of Architecture Architecture Thesis (S.M.)--Massachusetts Institute of Technology, Dept. of Architecture, 1998. Includes bibliographical references (leaves 64-68). The purpose of this thesis is to investigate how banks and other lending institutions approach environmental risk management -- how they evaluate, screen and provide for environmental risks in loan structuring and documenting loans. The intent of this investigation is to identify and assess differences in lending policies, practices, and pricing techniques among various lending institutions. This thesis will also examine how, via their lending policies and practices, lenders can encourage sustainable development, brownfield redevelopment, and ecologically responsible technologies in property development. This thesis proposes that there are three fundamental types of environmental risk. The first type is the actual or perceived contamination of the property that directly impairs the underlying asset value. This is the most easily understood type of environmental risk and can be assessed during the due diligence period before the transaction of the property. After contamination, the second risk affecting collateral value may occur from subsequent restrictions on property use, or in the processes or materials employed by the business operating on the property. The Environmental Protection Agency (EPA) can impose deed or other restrictions on the use of a property because of potential environmental contamination or other environmental hazards. Such limitations against the "highest and best use" could substantially diminish the potential revenue of a property and consequentially commercial property values. In this scenario, the real asset is unaffected, but a company's credit worthiness may suffer. The third type of environmental risk to a business is a possible change in consumer preferences or demands for eco-friendly products. In an extreme case, consumers could boycott environmentally damaging products, or possibly the firms that manufacture them. Again, losses in revenue may constrain a company's ability to satisfy loan payments. This thesis seeks to investigate how the three forms of environmental risk are factored into loan pricing and how banks evaluate information regarding environmental policies and consumer demands when determining corporate revenues and property values. In addition, the paper will study some of the lending institutions' due diligence and loan evaluation procedures when assessing these environmental risks. by Stephan J. Russo. S.M. 2012-03-16T16:00:31Z 2012-03-16T16:00:31Z 1998 1998 Thesis http://hdl.handle.net/1721.1/69752 42249329 eng M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission. http://dspace.mit.edu/handle/1721.1/7582 68 leaves application/pdf Massachusetts Institute of Technology |
| spellingShingle | Architecture Russo, Stephan J. (Stephan Joseph), 1969- Underwriting environmental risk : an analysis of current practices among lending institutions |
| title | Underwriting environmental risk : an analysis of current practices among lending institutions |
| title_full | Underwriting environmental risk : an analysis of current practices among lending institutions |
| title_fullStr | Underwriting environmental risk : an analysis of current practices among lending institutions |
| title_full_unstemmed | Underwriting environmental risk : an analysis of current practices among lending institutions |
| title_short | Underwriting environmental risk : an analysis of current practices among lending institutions |
| title_sort | underwriting environmental risk an analysis of current practices among lending institutions |
| topic | Architecture |
| url | http://hdl.handle.net/1721.1/69752 |
| work_keys_str_mv | AT russostephanjstephanjoseph1969 underwritingenvironmentalriskananalysisofcurrentpracticesamonglendinginstitutions |