Last week we talked about how lenders can help to ensure quality when it comes to environmental due diligence. This week we are focusing on how environmental professionals can do the same.
The importance of accuracy and keeping to high standards was an important talking point in the 2020 Environmental Bankers Association Summer Journal. Lizz Barringer Lagomarsino, Principal at Lagomarsino Planning + Management, wrote an article discussing titled The High Cost of Low Quality – Improving the Quality of Environmental Risk Management. The EBA followed up with a summary of an informal survey they conducted titled Quality v. Commoditization in Environmental Due Diligence. The survey questions asked whether EBA members have experienced barriers to quality, and if so, what the applicable reasons/challenges are.
According to the survey, environmental consultants and affiliate members identified barriers to quality more than lenders. Achieving quality alongside speed requires several factors, and the top noted solution in the survey was better communication at every step of the process.
“The need for better, early communication concerning site history, activities, knowledgeable contacts, and timelines. Investing more time and focus at this crucial step, and having a better information exchange between environmental professionals and lenders “will pay dividends to the quality of the Phase I report,” Lagomarsino says.
Here are some of the top barriers to quality according to environmental professionals, and what can be done about it:
1. Lacking information on property history and/or activities
Lacking information on property history and/or activities was noted as one of the top barriers for environmental professionals. Based on other results in the survey, it appears that they often struggle to gain access to basic property information needed for due diligence. Without easy access to information, environmental professionals may either have to spend extra time digging for information or may have to omit information they do not have access to.
Lagomarsino recommends lenders make sure to provide vendors with adequate and comprehensive information to conduct their assessments (e.g., correct address and boundary information, parcel numbers, anticipated buildings, site use, future use, prior reports, and any quirks or potential challenges anticipated).
2. Lack of site information from Lenders
One barrier noted strongly was deficient site information, including owner contact information. The survey shows that environmental professionals lay some of the blame on either a lack of access to owners (or a knowledgeable individual with intimate site knowledge) or government records, while lenders feel the responsibility lies with the environmental professional to obtain data via alternative methods.
This confirms Lagomarsino’s point about the need for better communication between both groups. Lenders should seek out ways to be as transparent as possible with environmental professionals, assuring them they have the information needed to correctly perform their jobs. Additionally, environmental professionals should be sure to have the technology and databases required to gather this information quickly and efficiently so that they don’t always have to rely on lenders.
3. Tight turnaround times
A common theme running through survey responses was that the pressure to produce reports quickly can often lead to subpar results. One environmental professional from the survey is quoted as answering: “The default to 2-week turns makes it difficult to do as thorough DD as we’d like. Someone gets squeezed, whether it’s the field assessor, sr. reviewer or report production staff that send links, upload, or email PDFs. Often, it’s everyone on the consultant side that’s constantly pressed.”
The need for a tight turnaround is unlikely to change, but the solution is to improve the workflow. Again, this starts with better communication, and technology that supports efficient workflows.
Consistent quality is possible with LightBox
When you make the decision to prioritize quality above all other metrics, the next steps are to define what that means specifically for your organization and then determine how to support those metrics.
Environmental risk management is complex and requires an analysis of a wide range of data and information. Environmental professionals also have to be fully up to date on the latest laws, regulations, policies, and practices. High-quality reports using accurate data are needed for informed decision-making.
Environmental professionals throughout the country rely on LightBox to help streamline the property due diligence process and to ensure quality due diligence. Our end-to-end platform for environmental consultants optimizes property due diligence workflows, streamlines the bidding process, makes it easier to collect the best data, and provides powerful report writing tools. Combined and connected on the LightBox platform, these powerful applications are helping stakeholders across the CRE cycle make better decisions and do their best work faster.
Contact us for a free demo and to discuss how LightBox can help ensure the quality of your due diligence reporting.
Category Environmental Consulting