ARTIFICIAL INTELLIGENCE – TEST ARTICLE
ArticleBy the end of 2025, something fundamental had shifted.
By the end of 2025, something fundamental had shifted. Environmental due diligence, once the gold standard for de-risking property, was showing its age. It hadn’t failed outright. It still did what it was built to do. But what it was built to do no longer matched the world it was being asked to serve.
That was the year climate finally stopped being a side conversation. Not just in reports or in headlines, but in contracts. In term sheets. In underwriting calls. Rising groundwater wasn’t theoretical anymore. Vapor intrusion wasn’t a footnote. And a Phase I Environmental Site Assessment that didn’t touch climate exposure was being quietly set aside in boardrooms and bulldozed in courtrooms.
If 2023 and 2024 were years of build-up, of models and projections and a low hum of nervous energy, 2025 was the break. It was the year risk came in through the side door, without waiting for an invitation. Wildfire zones extended into previously greenlit areas. A “safe” soil vapor profile turned toxic under late summer heatwaves. Flood maps, long trusted as gospel, failed to predict where water would actually go. And those failures had names, addresses, dollar signs.
Still, the process itself remained mostly unchanged. Environmental due diligence, in its standard form, stayed backward-facing. It relied on historic records, long-set parameters, templates built for a more stable climate and a more predictable regulatory regime. The standard scope focused on what was already known. It rarely asked what might be changing underneath.
That gap, between what the process was built for and what the market actually needed, grew wider every month. And by Q4, even the most conservative firms were forced to admit it.
AI and climate data didn’t cause the problem. But they pulled the curtain back on it. The tools became sharper, faster, more integrated. AI platforms could scan thousands of permits and historical records in seconds, flag likely areas of concern, visualize land use changes that would’ve taken human teams days to stitch together. Climate models could forecast likely flood recurrence, heat vulnerability, and water migration patterns with increasing precision. And yet, most environmental reports still stopped at the property boundary. Still based conclusions on datasets that were incomplete, outdated, or both. Still offered summaries that said “no evidence observed” instead of asking better questions.
That disconnect became the story. Not that the tools weren’t there, but that the process had no appetite to use them. Too much liability. Too many unknowns. Too far outside the scope.
And that phrase, “outside the scope,” started to rot.
It became the industry’s favorite shield. When climate risk didn’t show up in a report, it wasn’t because it didn’t matter. It was because someone had decided not to ask. The consultant said it wasn’t required. The lender said it wasn’t expected. The legal team said it was someone else’s problem.
But by the end of 2025, everyone knew that scope wasn’t a shield anymore. It was a line in the sand. And the water was already rising over it.
Smart firms began to adapt. They didn’t abandon the process. They expanded it. Climate overlays became standard in diligence reviews. Not just forward-looking flood models but thermal stress assessments, fire risk corridors, long-term soil volatility trends. Buyers started asking for proof that the report accounted for change. Not guesses. Not hedges. Actual data. Some even asked to see the raw climate modeling. They wanted to know what was being left out and why.
The most sophisticated lenders began issuing their own environmental risk screens. In some cases, those screens contradicted the reports they paid for. That tension was awkward at first. Then it became a signal. If your diligence didn’t match the lender’s climate view, the deal slowed. Or worse, stalled. Not because of a spill. Not because of an old tank. Because of future exposure that the report failed to acknowledge.
That was new.
Due diligence had always been a backward glance. A document meant to confirm the site had no history that could come back to bite you. But in 2025, history wasn’t the issue. The future was. And the report, if it didn’t ask forward-looking questions, wasn’t due diligence. It was décor.
So what happens next?
2026 will be the year the market stops treating climate risk as an extra layer. It becomes the core narrative. Reports that ignore it will be dismissed as incomplete. Consultants who refuse to touch it will be replaced. And firms that still treat environmental data as static will find themselves explaining why their scope didn’t catch what a floodplain overlay did.
This doesn’t mean that AI will take over the process. It won’t. But it will keep raising the bar. It will keep exposing where we’ve gotten lazy, where we’ve recycled language, where we’ve allowed reports to substitute tone for truth. And the people reading those reports will know the difference. They already do.
Due diligence isn’t dead. But it has lost the benefit of the doubt. It has to prove itself again. Not by being louder. By being smarter. By showing that it knows the risks aren’t coming from the past anymore. They’re already underfoot.
And if your report still treats change as someone else’s problem, it won’t be the data that fails you. It won’t be the model or the maps. It will be the story you chose not to tell.
ARTIFICIAL INTELLIGENCE
Reference
- S. Environmental Protection Agency – Climate Adaptation and Resilience for Superfund and Brownfield Sites (2025 Update)
https://www.epa.gov/superfund/superfund-climate-resilience - ASTM International – E1527-21 Standard Practice for Environmental Site Assessments: Phase I ESA Process
https://www.astm.org/e1527-21.html - Climate Risk and Real Estate Investment Decision-Making – Urban Land Institute (2025 Edition)
https://uli.org/climate-risk-real-estate - S. Department of Treasury – 2025 Guidance on Climate-Related Financial Risk for Lending Institutions
https://home.treasury.gov/news/press-releases - RMS – 2025 Climate Risk Modeling for Flood, Fire, and Wind Exposure
https://www.rms.com/models/climate-change - Canadian Brownfields Network – Integrating Forward-Looking Risk into Due Diligence Reports (2025 Position Paper)
https://canadianbrownfieldsnetwork.ca/publications - Intergovernmental Panel on Climate Change – Data Tools and Projection Models Used in Built Environment Risk (AR6 Reference)
https://www.ipcc.ch/report/ar6/wg2
