ESG is not just another buzzword doing the rounds. It is already influencing the way deals get done in lending, even if it is happening quietly. What used to be a nice extra on the side of a property transaction is becoming a deciding factor in how capital moves.

At TAB, they wanted to get ahead of this shift. Specialist lenders like them move quicker than the high street, which makes TAB a good testing ground for new ideas. Their view is simple: ESG is not a trend; it is a transition. And if that is true, then the finance behind property has to encourage change rather than just talk about it.

That is why TAB built ESG incentives into our commercial mortgage. If a borrower improves the EPC rating of their property from, say, a D to an A, they can cut their exit fee by up to 0.75%. Add something practical like EV charging or greener materials, and that is another 0.25%. Lease the building to a charity or adult-learning provider, and you can get a further 0.25%. Put it all together, and a borrower can reduce their exit fees by as much as 1.25%.

TAB’s commercial mortgage has a 2.5% exit fee. By meeting ESG criteria, borrowers can cut that fee in half, up to 1.25% of the loan amount. On a £5m loan, that means the exit fee would fall from £125,00 to £62,500. That is money back in the borrower’s pocket, while also making their building more attractive, cheaper to run, and less risky in the eyes of future investors. It is a win on both sides of the deal.

The truth is, ignoring ESG is starting to cost more than acting on it. Properties with poor EPC ratings are becoming harder to finance, and landlords know regulation is only going one way. On the flip side, buildings that show improvements hold their value better and have a higher demand. For lenders, it means safer loans. For borrowers, it means more options and better outcomes.

Of course, retrofitting is not easy, and not every building can tick every box. That is fine. TAB is not here to slow borrowers down with endless paperwork; their point is to reward genuine sustainability improvements that matter.

This is how change happens in the market. Not overnight, not with big announcements, but slowly and steadily. ESG is already influencing lending decisions, and incentives are making it part of everyday deals. The sooner people recognise that, the better prepared they will be for the future.

Specialist lending is built on speed and flexibility. ESG incentives slot neatly into that world because they align borrower interest with long-term asset value. Properties with poor energy ratings are becoming harder to finance and will face more regulatory pressure. Properties that show real improvements stand out in the market and hold their value.

Duncan Kreeger, CEO of TAB says: “ESG is not a trend. It is a transition, and in specialist lending, that transition is already well underway.”