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POLICIES AND TRANSPARENT REPORTING
INTRODUCTION
SUSTAINABILITY OBJECTIVES AND STRATEGY
ENVIRONMENTAL
SOCIAL
APPENDICES
Climate Change and Resilience
Climate change poses significant risks, both physical and transitional, to the real estate sector. Our ability to assess and respond to potential climate change impacts is critical to our survival as a company.
SASB standards focus on sustainability issues expected to have a financially material impact on the company and aim to serve the needs of most investors. TCFD provides a framework for climate-related disclosures to enable stakeholders to better understand climate-related financial impacts. TCFD was dissolved at the end of 2023 in a planned transition to the International Sustainability Standards Board (ISSB), which develops Sustainability Disclosure Standards for the International Financial Reporting Standards Foundation. The ISSB Standards form the global baseline for sustainability-related disclosures and build upon the SASB Standards and the TCFD Recommendations. The first two ISSB Standards, IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures, are effective for reporting periods as of January 1, 2024. ESRT has aligned its materiality assessment with TCFD and SASB disclosure topics to ensure that stakeholder expectations are addressed, and we will refine our alignment to reflect anticipated updates to ISSB Standards and SASB Standards in 2024. ESRT received target alignment validation from the SBTi, a reporting framework aligned with the latest climate science guidance to meet the goals of the Paris Agreement. Our targeted reduction for GHG emissions supports reduction pathways to limit global temperature rise to 1.5°C.
In 2023, we responded to the GRESB Assessment, which evaluated our organization’s approach to climate-related risks and TCFD criteria.
Category
Mitigation
PHYSICAL RISKS
Climate Change and Acute Weather Events
We have developed a Climate Change Adaptation and Resilience Policy for existing properties and potential acquisitions. Our Climate Change Risk Assessment Checklist is completed during the due diligence process. The policy and checklist include assessments of potential physical risks such as power interruption, flooding, heat waves, hurricanes, and winter storms. ESRT’s climate change asset level requirements include comprehensive risk assessments to identify and analyze relevant climate change risks and potential impact in RCP2.6, RCP4.5, RCP6.0, and RCP8.0 scenarios and an operational plan with guidelines for flooding, extreme temperatures, windstorm, hurricane, freeze conditions, and winter storms. The Geographic Concentration Risk is identified as a potential chronic risk, which acknowledges that natural disasters and long- term shifts in climate patterns such as sea level rise, could make a large portion of the portfolio non-operational or inaccessible. ESRT has geographic concentration risk due to the concentration of its properties in the Greater New York Metropolitan area, particularly in Manhattan. We have mitigation strategies, such as a formal disaster recovery plan and business continuity plan, in place, and have for over a decade. These plans are annually reviewed by management. Our management team conducts periodic tabletop exercises to test its plans. ESRT works with our insurers to proactively design plans that consider comprehensive and proactive climate-related risk. Our plans integrate disaster recovery and business continuity coverage through multiple insurers to diversify the risk basis.
Geographic Concentration
EMPIRE STATE REALTY TRUST: 2023 SUSTAINABILITY REPORT
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