GOVERNANCE
INTRODUCTION
ESG OBJECTIVES AND STRATEGY
ENVIRONMENTAL
SOCIAL
APPENDICES
63
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 ESG issues expected to have a financially material impact on the company and are aimed at serving the needs of most investors. TCFD provides a framework for climate-related disclosures to enable stakeholders to better understand the concentrations of carbon-related assets. ESRT aligned its materiality assessment with TCFD and SASB disclosure topics to ensure that stakeholder expectations were addressed.
In 2022, we responded to the GRESB Assessment, which evaluated our organization against TCFD criteria and our approach to climate-related risks. Our assessment is below.
Category
Mitigation
PHYSICAL RISKS
Climate Change and Acute Weather Events Flooding, Hurricanes, Winter Storms, Extreme Temperatures
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 conducting comprehensive risk assessments to identify relevant climate change risks in 1.5°C and 2°C scenarios, analyze climate change risks and potential impact, and develop an operational plan with guidelines for flooding, windstorm, hurricane, and freeze/winter storm. 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 (GNYMA), particularly in Manhattan. Our Enterprise Risk Assessment identified mitigation strategies that are currently in place at ESRT, such as a formal disaster recovery plan and business continuity plan that have been communicated to employees and tested as well as disaster recovery and business continuity coverage through multiple insurers to diversify the risk basis.
Geographic Concentration
EMPIRE STATE REALTY TRUST: 2022 SUSTAINABILITY REPORT
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