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Proactive Strategies for Emerging BERs in 2025

Understanding Business Environmental Risks (BERs): Beyond the Phase I ESA

When evaluating a commercial property, environmental due diligence extends beyond contamination concerns to include Business Environmental Risks (BERs)—factors that may impact a property’s value, operations, or regulatory standing.

ASTM defines BERs as risks with “material environmental or environmentally-driven impacts” on a business. Unlike Recognized Environmental Conditions (RECs), which focus on the presence or likely presence of hazardous substances, BERs encompass broader concerns such as regulatory compliance issues, emerging contaminants, and site-specific conditions that could pose financial or operational risks.

While BERs do not always trigger a Phase II investigation, they are critical in assessing liabilities and making informed decisions. Identifying and managing these risks helps protect investments and transactions, preventing unforeseen environmental liabilities from disrupting business objectives.

 

Key Differences: BERs vs. RECs

While RECs dominate Phase I ESA reports, BERs demand equal attention. For instance, a property with aging HVAC systems containing regulated refrigerants (a BER) may face costly upgrades under 2025 EPA refrigerant phaseout rules, even if no contamination exists.

Emerging BERs in 2025

Regulatory Shifts:

    • New PFAS restrictions (e.g., Maryland) and climate accountability laws (e.g., NY’s Climate Superfund Act) are expanding liability
    • Updated FEMA flood maps and insurability challenges affect coastal and wildfire-prone properties

Market Realities:

    • 60% of Mid-Atlantic lenders now require BER disclosures for loans
    • Tenant demand for ENERGY STAR/LEED certifications influences lease terms

Key BERs to Watch:

    • Physical Risks: Flooding, extreme weather, and aging infrastructure (e.g., HVAC systems with phased-out refrigerants).
    • Emerging Contaminants: PFAS, microplastics, and other unregulated substances
    • Operational Liabilities: Asbestos abatement costs, lead paint compliance, or wetland restrictions

 

Why BERs Matter in Transactions

BER assessments are now integral to environmental due diligence for:

  • Risk Mitigation: A Brooklyn warehouse’s $2M price adjustment in 2024 due to pending asbestos abatement (a BER)
  • Financing: Over 60% of Mid-Atlantic lenders now require BER disclosures for CRE loans
  • Strategic Planning: Proactive BER management can unlock tax incentives (e.g., NJ’s Clean Energy Program)

Steps to Protect – Environmental Risk Management Checklist

1. Initial Assessment & Planning

    • Assess transaction scope and intended property use for risk exposure
    • Verify if a Phase I ESA or Transaction Screen was completed
    • Identify whether smaller loans bypass formal assessments (addressing blind spots)

2. Property-Specific Evaluations

    • Mandate surveys for high-risk activities (renovations/demolitions) covering:
      • Asbestos, lead, mold
      • Wetlands, radon, industrial hygiene
    • Audit historical property use for legacy contamination
    • Maintain HVAC in vacant buildings to prevent mold/air quality issues

3. Regulatory & Emerging Risks

    • Confirm compliance with all environmental regulations
    • Evaluate financial liabilities (remediation costs/fines)
    • Monitor emerging contaminants (PFAS, climate risks)
    • Calculate physical/climate risks (floods, extreme weather)

4. Risk Mitigation Actions

    • Rank risks by severity/likelihood; develop contingency plans
    • Engage environmental experts for specialized assessments
    • Embed ESG frameworks into due diligence
    • Prepare ESG/sustainability reports for stakeholders

5. Key Verification Questions

    • Is there a documented risk management plan?
    • How are identified risks being controlled?
    • Are renewable energy/resilience measures considered
Proactive Steps for Transactions
  • Negotiate Protections: BER-specific indemnities or escrow holds.
  • Leverage Tools: EPA’s BER Screening Tool or ClimateCheck for forward-looking risks.
The Bottom Line

In 2025’s evolving regulatory landscape—where 43% of CRE professionals report BER-related deal delays—proactive identification of environmental business risks is no longer optional. By integrating BER analysis into your due diligence process, you protect investments while positioning assets for sustainability-driven market advantages.

For more information contact:Kristin Heimburger, LSRP, Director of Environmental Consulting at kristin@ttienv.com or Tim Popp, VP of Environmental Consulting/Industrial Hygiene at timp@ttienv.com