When evaluating a commercial property, environmental due diligence should extend beyond contamination concerns to include Business Environmental Risks (BERs) – factors that can affect a property’s value, operations, financing, or regulatory standing.
ASTM describes BERs as risks with material environmental or environmentally driven impacts on a business associated with the current or planned use of commercial real estate. Unlike Recognized Environmental Conditions (RECs), which focus on the presence or likely presence of hazardous substances or petroleum products, BERs encompass a broader range of issues, including regulatory compliance concerns, emerging contaminants, and site-specific conditions that may create financial or operational exposure.
While BERs do not always lead to a Phase II investigation, they often influence transaction decisions, capital planning, and long-term asset management. Identifying and addressing these risks early can help organizations avoid unexpected liabilities and make more informed investment decisions.
BERs and RECs
RECs remain central to Phase I ESA reporting, but BERs deserve equal attention in the due diligence process. A property may not have a contamination issue and still present meaningful business risk if it has aging infrastructure, compliance gaps, or climate exposure that could drive future costs.
For example, a facility with older HVAC systems containing regulated refrigerants may not present a REC, but it may still create a BER if retrofit or replacement costs are likely under current EPA requirements. In the same way, flood-prone properties, legacy building systems, and operational constraints can all shape the risk profile of a transaction even when no release has been identified.
Evolving BER Trends
Regulatory and market conditions continue to expand the scope of BERs, especially in the Mid-Atlantic region.
National trends
- PFAS product restrictions and reporting obligations continue to expand across industries.
- Climate risk disclosure and physical resilience concerns are becoming more important in financing and asset planning.
- Ongoing refrigerant phaseouts and infrastructure replacement needs continue to affect aging building systems.
Regional highlights
These developments can affect permitting timelines, compliance costs, insurance availability and lender expectations, making BER review increasingly important in due diligence.
Why BERs Matter in Transactions
BERs are becoming a more important part of environmental due diligence across commercial real estate and corporate transactions.
- Risk mitigation: Identifying BERs early can help prevent unexpected costs and project delays.
- Financing: Lenders are increasingly considering environmental and climate-related risk in underwriting decisions.
- Strategic planning: Proactive BER management can support long-term asset value and operational resilience.
Even when a BER does not require immediate remediation, it may still affect how a property is priced, financed, developed, or managed over time.
Environmental Risk Management Checklist
1. Initial assessment and planning
- Define the transaction scope and intended property use.
- Confirm whether a Phase I ESA or Transaction Screen has been completed.
- Identify areas where smaller transactions may have bypassed formal review.
2. Property-specific evaluations
- Conduct surveys for high-risk activities such as renovation or demolition.
- Evaluate concerns such as asbestos, lead, mold, wetlands, and indoor air quality.
- Review historical property use for possible legacy issues.
- Maintain building systems in vacant properties to help prevent environmental degradation.
3. Regulatory and emerging risks
- Verify compliance with applicable environmental regulations.
- Assess potential financial liabilities, including remediation and penalties.
- Monitor emerging risks such as PFAS and climate-related impacts.
- Evaluate physical risks, including flooding and extreme weather.
4. Risk mitigation actions
- Prioritize risks based on likelihood and impact.
- Engage environmental professionals for targeted assessments.
- Integrate ESG considerations into due diligence where appropriate.
- Prepare documentation to support stakeholder and investor transparency.
5. Key verification questions
- Is there a documented environmental risk management plan?
- How are identified risks being monitored and controlled?
- Are resilience or sustainability measures being considered?
The Bottom Line
Business Environmental Risks are becoming a more important part of environmental due diligence, especially as regulatory, climate, and market conditions continue to evolve. While BERs do not replace the Phase I ESA, they can complement it by helping decision-makers identify broader operational, financial, and regulatory exposures before a transaction moves forward. In practice, many lenders and other stakeholders already use risk-based environmental screening as part of their underwriting or review process, making BER awareness an increasingly useful part of informed due diligence.
For more information contact:
Karen Buniak, SAME, VP Business Development at karenb@ttienv.com or Kristin Heimburger, LSRP, VP Environmental Consulting at kristinh@ttienv.com
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