2021
SUSTAINABILITY REPORT
Table of Contents 3 Introduction
36
Social
38 Employees 42 Tenants 42 Investors & Shareholders 42 Community 44 Vendors and Procurement 44 Brokers 44 Diversity, Equity & Inclusion
3 Letter from Chairman, President, and Chief Executive Officer 4 ESRT Overview 5 Portfolio Highlights & Achievements 6 Environmental, Social, and Governance Strategy 7 Integration 8 Leadership 10 Materiality and Stakeholder Engagement
48
Governance
12
Environmental 14 Carbon Neutrality 16 Goals and Targets 18 Environmental Performance
50 Board & Management Oversight of ESG 51 Risk Management 51 Board Diversity 54 Code of Business Conduct and Ethics 54 Disclosure Frameworks & Industry Alignment
22 Sustainability Guidelines & Policies 28 High-Performance Healthy Buildings 30 Tenant Engagement 32 ESRT Version 2.0
56
Appendices
57 About This Report 58 Technology and Innovation Partners 59 GRI Content Index
61 SASB Index 64 TCFD Index
April 22, 2022
It is a pleasure and a privilege for us to share our 2021 Sustainability Report and present a year of continued achievement and commitment to our shareholders, tenants, team, and community. We have continued and expanded upon our industry leadership in sustainability, Indoor Environmental Quality (IEQ), and healthy buildings and moved strongly forward with actions to support our team and our community. We have a comprehensive techno-economic program, aligned with the Science-Based Targets Initiative (SBTi) 1.5 °C pathway and we have developed customized plans to address each goal with targeted ROI- based initiatives. We have stated our commitment to a 2030 carbon neutrality target for the Empire State Building and a 2035 carbon neutrality target for the balance of our office portfolio. In partnership with the New York State Energy Research and Development Authority (NYSERDA), we launched Version 2.0 of our groundbreaking energy efficiency retrofit program for the existing built environment. These case studies show a pathway and the economic case to achieve, in coordination with New York State’s Climate Leadership and Community Protection Act (CLCPA), our goal of 80% operational emissions reduction by 2030. Visit this free guide for office landlords to develop their roadmap toward carbon neutrality HERE. We led the industry as the first North American commercial portfolio to receive the WELL Health‑Safety rating, and we were one of the first to have our rating renewed. We piloted new IEQ technologies to position our assets to exceed leading IEQ health and wellness standards. We have made all these benefits accessible to all tenants, not just large tenants, through our IEQ Pre-Built Suites with energy efficiency at an accessible price point. Energy efficiency and health and wellness are available to all types of tenants at ESRT properties. We have committed to diversity, equity, and inclusion within our company and supply chain through training, mobilization, and engagement. In 2022 we were included in the Bloomberg Gender Equality Index. Per the policy we implemented in 2021, every bid should include at least one bidder from an underrepresented group and every vendor must agree to ESRT’s Vendor Code of Conduct. We have also invested to create better opportunities and inclusivity for diverse vendors. ESRT has also added to the quality of our community with enhanced engagement activities at the workplace and in our volunteer work. We have served our community through park clean-ups, oyster seeding, work in soup kitchens, and more. We sponsor company-wide volunteer events throughout the year and also provide volunteer time off to encourage our people to make a difference outside of the workplace at organizations of their choosing. In 2021 ESRT demonstrated continued leadership in a challenging time. We pushed forward on all fronts to continue to deliver value to our stakeholders and achieve our sustainability goals. There is more work to do, and we are committed to achieve.
Anthony E. Malkin Chairman, President, and Chief Executive Officer
Dana Robbins Schneider SVP, Director of Energy, Sustainability, and ESG
3
ESRT OVERVIEW
We advance Environmental, Social, and Governance (ESG) principles through our industry leadership, expertise, and commitment to community. We establish and execute our sustainability framework to reduce our buildings’ impacts and foster health and resiliency. We do this with a focus on accountability and financial performance and care for the well-being of ESRT’s people and the communities where we work and live. Daily, we take steps to reduce the environmental impact of our portfolio, more than 10 million rentable square feet of commercial and retail space in the Greater New York metropolitan area, and have made plans for 2022 for the 625 high-rise Manhattan apartments we added to our portfolio in December 2021. We make investments and adjust our practices to achieve quantifiable improvement in energy efficiency, carbon emissions reduction, water efficiency, waste diversion, healthy buildings, and the wellness of our tenants and employees. ESRT’s leadership in energy efficiency and emissions reduction is locally, nationally, and globally recognized. We innovate, model, and implement steps to address climate change, and through our work deliver returns for, and protect, our stakeholders. This is the work on which we have based our goal to achieve carbon neutrality by 2030 at the Empire State Building and by 2035 throughout our entire portfolio. We are a 2021 ENERGY STAR Partner of the Year, and 76% of our office and retail portfolio is certified by ENERGY STAR, the national industry standard for energy efficiency. We earned a Five Star Rating from the Global Real Estate Sustainability Benchmark (GRESB) along with the highest possible score of an A for ESG disclosure and reporting. ESRT’s commitment to disclose and report progress against goals and initiatives transparently is in alignment with leading governance frameworks including GRI, SASB, and TCFD. ESRT’s emissions reduction targets have been approved by SBTi as consistent with a 1.5 °C climate scenario, the most ambitious goal of the Paris Agreement. Our commitment to the advancement of verified scientific approaches to healthy buildings and IEQ, which supports tenant well-being, has earned us the distinction of Fitwel Champion. ESRT partnered with the International WELL Building Institute and the Mayo Clinic to achieve the WELL Health-Safety Rating across 100% of our portfolio and was one of the first commercial portfolios in the Americas to achieve and be recertified for this rating. Our processes and policies support the effective implementation of these standards to ensure accountability and efficiency across our organization and ESG objectives. We are an example of successful implementation of comprehensive, innovative, and impactful ESG policies, stakeholder engagement, and clear and actionable corporate governance. Our expertise and dedication in these areas position us to facilitate sustainable and healthy buildings within our portfolio and share best practices with our peers.
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EMPIRE STATE REALTY TRUST: 2021 SUSTAINABILITY REPORT
#1 MOST EFFICIENT REIT IN NYC
2021 Green Lease Gold Leader
100% WELL Health-Safety Rated
Based on kgCO 2 e per square foot per Morgan Stanley February 5, 2020 research report (documenting 2019 data)
#1 LOWEST EMISSIONS OF ALL NYC-BASED REITS Per Green Street November 24, 2021 research reports (documenting 2020 data)
83% Manhattan Portfolio Fitwel Certified Fitwel Champion
GRESB Green Star Rating Top 20% of all GRESB Respondents GRESB Public Disclosure A Rating
Empire State Building is LEED EB O&M v4 Gold
1.5°c commitment
NYC MAYOR’S OFFICE OF SUSTAINABILITY NET ZERO COMMITMENT
Department of Energy (DOE) Better Climate Challenge Partner
Reimagining Low-carbon Buildings
5
ESG STRATEGY
ENVIRONMENTAL
SOCIAL
GOVERNANCE
APPENDICES
INTRODUCTION
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE STRATEGY
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EMPIRE STATE REALTY TRUST: 2021 SUSTAINABILITY REPORT
Integration Sustainability is integrated into who we are and what we do in every aspect of our business. Our groundbreaking work sets the standard for our industry and delivers long-term value for our stakeholders, tenants, colleagues, and the communities where we live and work.
INDOOR ENVIRONMENTAL QUALITY Since 2010, ESRT has deployed a leading IEQ program that includes bi-polar ionization, MERV 13 filtration, air quality monitoring, and low/no VOC materials.
CARBON NEUTRAL BUILDINGS Through our design standards, operational practices, and targeted
decarbonization roadmap, ESRT provides an industry leading standard for decarbonizing the built environment in New York City.
HEALTHY BUILDINGS
ESRT creates spaces that support the health and wellness of our tenants and employees. We partner with tenants throughout the design process to include key design elements to enhance occupant productivity and wellness.
RESOURCE CONSERVATION
ESRT designs and operates its buildings with environmental impact and resource conservation as a priority to ensure we operate our buildings efficiently to reduce energy, water
consumption, and waste production.
COMMUNITY ENGAGEMENT We partner with the local community through our leadership in sustainability, charitable donations, and volunteerism.
7
ESG STRATEGY
ENVIRONMENTAL
SOCIAL
GOVERNANCE
APPENDICES
INTRODUCTION
Leadership ESRT participates in thought leadership and pilots new strategies and technologies that provide data for decisions and a blueprint for action in the real estate industry. We measure progress against our goals consistently and holistically. We utilize an array of sensors, automation platforms, and real-time metered data. Our advanced data management facilitates understanding of consumption and performance, identifies areas of opportunity, and verifies successful measures. We leverage our portfolio as a dynamic, living laboratory, where we pilot technologies designed to push our industry forward. We reduce the potential for future problems for our portfolio through physical and operational resilience strategies in every building, and we amplify and disseminate that knowledge in an open-source format so others can learn from our experience.
ESRT INDUSTRY PARTICIPATION
New York City Climate Mobilization Act: LL97 Advisory Board + Commercial Buildings Working Group Co-Chair
Real Estate Roundtable Board Member and Sustainability Policy Advisory Committee Chair
REBNY Sustainability Committee
ULI Tenant Energy Optimization Program
NAREIT Real Estate Sustainability Committee
NYC Mayor’s Carbon Challenge
The Clean Fight
WELL Living Lab / Mayo Clinic Partner
Urban Green Board of Directors
USGBC LEED Steering Committee
DOE’s Better Climate Challenge & Better Buildings Initiative
EPA working groups on Energy Star updates, underlying Commercial Building Energy Consumption Survey and Energy Information Agency dataset, eGRID
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EMPIRE STATE REALTY TRUST: 2021 SUSTAINABILITY REPORT
We train our property managers, ESRT colleagues, and tenants to ensure our sustainability programs are understood and implemented across the portfolio. Our work is detailed throughout our investor materials and published online to inform investors and lenders. We maintain active engagement with federal, New York State, and New York City government, and share our work to inform policy with our successful practice. We share our work so all are aware of its potential impact on shared goals and objectives. We align our program with global frameworks including the United Nation’s (UN) Sustainable Development Goals (SDG). The UN created the SDGs as a framework to address global challenges and create a more sustainable world. Each of our targets and initiatives are created with the SDGs in mind.
ESRT ESG STRATEGIES AND COMPONENTS
9
ESG STRATEGY
ENVIRONMENTAL
SOCIAL
GOVERNANCE
APPENDICES
INTRODUCTION
Materiality and Stakeholder Engagement
In 2021 we conducted a Materiality Assessment in alignment with TCFD and SASB standards to highlight the ESG issues most impactful to our business and stakeholders, based on their responses. The Materiality Assessment measured ESG topics based on each stakeholder’s impression of the topic’s impact and importance on the organization. Stakeholders included employees, peers, investors, service providers, government and community members. Impact refers to the effect an organization has on the economy, the environment and/or society, which can indicate its contribution (positive or negative) to sustainable development. Sustainable development meets the needs in the present without compromising the ability of future generations to meet their needs. A high impact implies that an organization’s contribution (positive or negative) could or will be large. Importance refers to the degree to which a specific metric/issue is aligned with the organization’s vision and purpose, and/or the extent to which stakeholders express concern for this metric/issue. A high importance implies that a topic is integral to the organization’s overall mission and operations.
SASB Standards focus on ESG issues expected to have a financially material impact on the company, aimed at serving the needs of most investors. TCFD provides a framework for climate- related disclosures to enable stakeholders to understand better the concentrations of carbon- related assets. ESRT aligned its materiality assessment with TCFD and SASB disclosure topics to ensure stakeholder expectations are addressed.
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EMPIRE STATE REALTY TRUST: 2021 SUSTAINABILITY REPORT
The below materiality matrix represents the complete matrix for all material topics and stakeholders.
ENVIRONMENTAL
1 Alternative/Mass Transportation 2 Biodiversity from Property Operations
3
3 Energy Efficiency 4 Renewable Energy
5 Greenhouse Gas (GHG) Emissions 6 Sustainability Certifications, Ratings, and Labeling Schemes 7 Sustainability Certifications Specific to Health and Well-being 8 Pollution of Nearby Land and Water Bodies 9 Environmental Purchasing Practices
5
4
8
6
2
7
3
6
3
3
6
5
10 Waste Diversion 11 Waste Reduction 12 Water Conservation
7
2
8
2
4
10
7
1
12
11
1
1
11
9
5
1
8
SOCIAL
10
9
1
Assessing/Measuring the Impacts of Entity Operations on Local Communities 2 Diversity, Equity, and Inclusivity of Senior Management 3 Diversity, Equity, and Inclusivity of All Employees 4 Employee Compensation 5 Health & Well-being 6 Indoor Environmental Quality (IEQ) 7 Human Rights 8 Occupational Health & Safety 9 Stakeholder Engagement 10 Screening Suppliers and Service Providers on Environmental Criteria 11 Training and Education
9
10
2
4
IMPACT
OBSERVATIONS FROM 2021 MATERIALITY ASSESSMENT Stakeholders identified the below eight topics as the most material topics to ESRT’s Sustainability and ESG strategy. This report details our strategy and initiatives to address each of these key points.
Energy Efficiency
3
GOVERNANCE
Greenhouse Gas (GHG) Emissions
1
Anti-corruption Policies and Procedures
Renewable Energy
5
2 Anti-harassment 3 ESG Responsibility and Accountability Resting with the Most Senior Executive and Board 4 ESG Performance Impacting Employee Pay 5 Data Privacy and Security 6 Equal Pay 7 Business Ethics 8 Compliance with Laws and Regulations 9 Shareholder Rights 10 Transparency and Reporting
Compliance with Laws and Regulations
Indoor Environmental Quality (IEQ)
4
8
6
2
3
Diversity, Equity and Inclusivity of Employees
5
Diversity, Equity and Inclusivity of Senior Management
Health & Well-being
IMPACT
RESILIENCE
ENVIRONMENTAL
SOCIAL
GOVERNANCE
1
Climate Related Physical Risks 2 Climate Related Transition Risks 3 Emergency Preparedness
ESRT will conduct materiality assessments every three years to assess and align with shifts in circumstances and stakeholder priorities.
11
ENVIRONMENTAL
ESG STRATEGY
SOCIAL
GOVERNANCE
APPENDICES
INTRODUCTION
ENVIRONMENTAL
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EMPIRE STATE REALTY TRUST: 2021 SUSTAINABILITY REPORT
Buildings presently consume 70% of electricity in the United States and account for almost 40% of Greenhouse Gas (GHG) emissions. In major cities like New York City, the built environment accounts for over 70% of GHG emissions. 1 At ESRT, we believe in the power of building performance to drive global and local emissions reductions, improve employee productivity, enhance our competitive position, mitigate our stakeholders’ exposure to future costs and degradation of value, and lead in environmental stewardship. We evaluate new and emerging technologies to optimize performance across our key priority areas, and advance our efforts towards the reduction of energy, GHG emissions, water, and waste and the enhancement of IEQ. Our decarbonization and sustainability programs include consideration of embodied carbon so that we balance optimization with reuse and lifecycle assessments. Our strategy and implementation of best practices, state-of-the- art technologies, and results-driven initiatives position us to set the standard for the built environment. Key Performance Indicators
WASTE
INDOOR ENVIRONMENTAL QUALITY
WATER
ENERGY
EMISSIONS
1 Source: NYC Mayor’s Office of Climate and Environmental Justice
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ENVIRONMENTAL
ESG STRATEGY
SOCIAL
GOVERNANCE
APPENDICES
INTRODUCTION
Carbon Neutrality The Empire State Building (ESB) targets carbon neutrality by 2030 with an 80% operational carbon reduction, achieved through the implementation of energy efficiency and emissions reduction measures, an increasingly renewables-sourced grid in compliance with New York State’s CLCPA, and up to 20% offsets with off-site additive clean energy generation, Renewable Energy Credits (RECs), or other verifiable strategies. Owners, operators, and tenants of commercial properties must work together to meet carbon reduction targets as set forth in New York City’s Local Law 97 (LL97). Our work has proven that building interventions are required, along with planned major changes in power supply to the grid, to achieve NYC’s and international long-term targets of 80% reduction of GHG by 2050. The most impactful reduction by buildings is achieved through implementation of energy and emissions reduction measures at the asset level. Our groundbreaking deep energy retrofit at the Empire State Building, which began in 2010 has reduced GHG emissions by 54% from our 2009 benchmark. This version 1.0 work provided the real estate industry with a blueprint of what was then technically and economically possible in the built environment and was integrated into our entire portfolio. ESRT has just completed and announced in April 2022 an update of its 2009 roll-out that outlines further steps on our decarbonization roadmap, referred to as ‘ESRT 2.0’.
GOAL ESRT Carbon Neutral by 2035
ESRT’S DEFINITION OF CARBON NEUTRALITY
Reduce building operational emissions with a renewably sourced grid aligned with New York State’s CLCPA, offset residual emissions through clean energy generation and/or RECs, and report transparently, until net annual building operational carbon emissions are equal to zero.
ROADMAP TO CARBON NEUTRALITY
2007
2009
2010
2012
SEP 2007 • ESRT began development of ‘ESB 1.0’ deep energy retrofit study
APR 2009 • ESRT announced ESB 1.0 groundbreaking retrofit, and provided the industry with a free open protocol blueprint of what is technically and economically possible
DEC 2009 • ESRT established baseline for portfolio energy/GHG performance • Implemented High Performance Design and Construction Standards, requiring all ESRT build out to be built to and perform at the highest level of efficiency DEC 2009 – Present (Ongoing) • Submit for ENERGY STAR Certification and utilize ENERGY STAR Portfolio Manager to track performance • Optimize building operations through benchmarking and tracking data, energy audits, retrocommissioning and M&V • Pilot new technologies for energy efficiency and emissions reduction
JAN 2010 • ESRT
JAN 2012 • ESRT integrated operational best
purchased 100% wind electricity for the Empire State Building
practices from ESB 1.0 into portfolio standards • ESRT partnered with Urban Land Institute (ULI) to develop the Tenant Energy Optimization Program to demonstrate tenants’ role in energy reduction and proven methodology for modeling and proving the business case for sustainable tenant spaces began with Natural Resources Defense Council in 2010
• Guaranteed
• 38% energy reduction • 3.1 year payback
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EMPIRE STATE REALTY TRUST: 2021 SUSTAINABILITY REPORT
The Empire State Building has been 100% powered by renewable energy since 2010, and as of January 2021, we offset 100% of the electricity used in the portfolio through clean wind power Renewable Energy Credits (RECs). That makes ESRT the largest real estate user of 100% green power in the United States. 1 Through our partnerships with Green Mountain Energy and Direct Energy, an estimated 300 million kilowatt hours of clean energy will be sourced which we estimate will avoid more than 450 million pounds of carbon dioxide emissions.
54% from baseline of 2009 Empire State Building reduced emissions by
=
2019
2021
2022
Annual energy use of 2,000 homes 46 million miles driven 22,000 acres of US forests 20 million pounds of coal burned
JAN 2019 • ESRT formalized
JAN 2021 • ESRT offset 100% of the electricity used in the portfolio through clean wind power RECs APR 2021 • ESRT committed to carbon neutrality for ESB by 2030, and portfolio by 2035 • ESB decarbonization roadmap study completed
APR 2022 • ESRT announced ESRT 2.0, ESB decarbonization roadmap, and releases Decarbonization Playbook in public- private partnership with NYSERDA • ESRT announced community solar contract for a new 3.2MW solar project, 8.2MW battery storage system, and 80 EV charging stations at 500 Mamaroneck Avenue
sustainability standard operating procedures for the portfolio
OCT 2019 • ESRT began
development of ESRT 2.0 decarbonization roadmap
Source: EPA Greenhouse Gas Equivalencies Calculator
1 Source: EPA Green Power Partnership Report
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ENVIRONMENTAL
ESG STRATEGY
SOCIAL
GOVERNANCE
APPENDICES
INTRODUCTION
Goals and Targets
In 2021 ESRT conducted an in-depth goals and targets exercise to ensure our goals are ambitious and supported by independently verified data. We focused on six categories for our portfolio: GHG emissions, energy, water, waste, and ENERGY STAR and green building certifications. To develop and establish these goals, we used 2018 as a baseline year to ensure goals met or exceeded our existing commitments such as NYC Carbon Challenge, US Department of Energy’s Better Climate Challenge and Empire Building Challenge. We also aligned our targets with industry standards and frameworks where possible, including the United Nations Sustainable Development Goals (UN SDGs).
ENERGY
GHG EMISSIONS
Energy and Atmosphere Ensure access to affordable, reliable, sustainable and modern energy for all
Climate Action Take urgent action to combat climate change and its impacts
• Target a reduction of energy use intensity by 20% by 2024 as part of the U.S. Department of Energy’s Better Buildings Challenge • ESRT offsets 100% of the electricity used in the portfolio through clean wind power RECS • Nation’s largest 100% user of green power in real estate per EPA Green Power Partnership report given that 100% of our portfolio is covered by renewables • #1 most efficient REIT in NYC based on kgCO 2 e per square foot per Green Street November 24, 2021 Report (documenting 2020 data)
• Target net-zero carbon emissions by 2030 at the Empire State Building and across our portfolio by 2035 • W ork to identify pathways to exceed NYC goals to reduce GHG emissions 40% by 2030 and 80% by 2050 • Intend to meet the Empire Building Challenge and
commit to leadership at a statewide level to achieve 85% local emissions reduction by 2035 in partnership with the grid
GOAL*: 50% site energy reduction by 2035 2021 PROGRESS: ON TARGET ENERGY USE INTENSITY (kBtu/ft 2 ) 58 57 66 2021 2020 2019
GOAL*: Carbon Neutrality by 2030 for Empire State Building, and by 2035 for
Science Based Targets Initiative In 2021 we publicly committed to the Science Based Targets initiative (SBTi); a reporting framework aligned with the latest climate science guidance towards meeting the goals of the Paris Agreement. We received SBTi alignment approval in 2021 which validates through accredited global third-party experts that our targeted reduction for GHG emissions supports reduction pathways to limit global temperature rise to 1.5C. Few real estate companies have made this aggressive commitment. We intend to demonstrate these ambitious goals are technically achievable and economically advantageous in our industry.
the office portfolio 2021 PROGRESS: ON TARGET
GREENHOUSE GAS EMISSIONS INTENSITY (kgCO 2 e/ft 2 )
4.77
2021
4.21
2020
5.18
2019
* All goals and targets represent like-for-like comparisons for assets owned for 24 consecutive months across the current and previous reporting year. 2020 and 2021 energy use outcomes were impacted by low building utilization rates during the COVID-19 pandemic, and thus are not representative of consumption at full occupancy.
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EMPIRE STATE REALTY TRUST: 2021 SUSTAINABILITY REPORT
WATER CONSUMPTION
WASTE
CERTIFICATIONS
• Pursue ENERGY STAR Certification at 100% of eligible buildings • Report to GRESB annually • Align reporting with TCFD, SASB, and GRI as feasible • Perform third-party data verification in alignment with ISO 14064-3 • Maintain WELL Health-Safety Rating annually • Environmental Management System aligned with ISO 14001 adopted in 2020 • Climate Change Adaptation and Resilience plan intended to align with TCFD Good Health and Well-being Decent Work and Economic Growth • Ensure healthy lives and promote well-being for all at all ages • Promote inclusive and sustainable economic growth, full and productive employment and decent work for all
Clean Water and Sanitization Ensure availability and
Responsible Consumption and Production Ensure sustainable consumption and production patterns
sustainable management of water and sanitation for all
• Target reduction of water use 2% year-over-year • Target 30% reduction by 2035 from a 2018 baseline • Implement ultra-low-flow touchless fixtures in all renovations • Phase in real-time water metering software across the portfolio between 2020 and 2025
• Target a reduction of waste generation 5% year-over-year • Target 75% waste diversion rate by 2035 from a 2018 baseline • Perform waste audits at 100% of properties annually (note: this could not be effectively done in 2020 due to pandemic precautions and impact on waste diversion measures)
GOAL*: 30%
GOAL*: 100% of eligible buildings are green-certified across LEED, Fitwel, and WELL Health-Safety rating by 2025
GOAL*: 75% of eligible buildings are ENERGY STAR-certified by 2025
GOAL*: 75% waste diversion rate by 2030 2021 PROGRESS: ON TARGET
reduction in water intensity by 2035 2021 PROGRESS: ON TARGET
WATER (m 3 )
WATER DIVERSION
Achieved goal for green building certifications
Exceeded goal for achieving ENERGY STAR certifications
297,834 318,388 581,193
36%
2021
2021
35%
2020
2020
22%
2019
2019
* All goals and targets represent like-for-like comparisons for assets owned for 24 consecutive months across the current and previous reporting year. 2020 and 2021 water usage and waste diversion outcomes were impacted by low building utilization rates during the COVID-19 pandemic, and thus are not representative of consumption or waste generation at full occupancy.
17
ENVIRONMENTAL
ESG STRATEGY
SOCIAL
GOVERNANCE
APPENDICES
INTRODUCTION
Empire State Realty Trust commits to disclose key environmental performance metrics across energy, GHG emissions, water, and waste to track, evaluate, and improve performance. We disclose environmental performance data for properties where Empire State Realty Trust has full operational control and authority to implement operational policies related to energy, GHG emissions, water, and waste. The reporting boundary includes 14 properties wholly owned and controlled by Empire State Realty Trust as of December 31, 2021. GHG Emissions were calculated in accordance with the WRI GHG Protocol and verification of the data contained herein was conducted in accordance with ISO 14064 Part 3. A similar approach and methodology was utilized for energy, water, and waste data.
ENVIRONMENTAL PERFORMANCE
2021 ENERGY CONSUMPTION DISTRIBUTION* (MWh)
13% reduction in energy consumption compared to 2020
160,871 MWh
Electricity ( 98,106 ) Steam ( 34,877 ) Fuel ( 27,888 )
LIKE-FOR-LIKE ENERGY USE INTENSITY* (kBtu/ft 2 )
100% of portfolio electricity has been offset through the purchase of Green E Certified Wind Power Renewable Energy Credits
100
76
66
75
58
57
50
25
2018
2019
2020
2021
* Energy usage is calculated on a like-for-like basis each year. 2020 and 2021 energy use outcomes were impacted by low building utilization rates during the COVID-19 pandemic, and thus are not representative of consumption at full occupancy.
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EMPIRE STATE REALTY TRUST: 2021 SUSTAINABILITY REPORT
GREENHOUSE GAS EMISSIONS PERFORMANCE
2021 GREENHOUSE GAS EMISSIONS* (MTCO 2 e)
13% reduction in emissions compared to 2020
45,231 MTCO 2 e
Scope 1 ( 6,888 ) Scope 2 ( 21,002 ) Scope 3 ( 17,341 )
LIKE-FOR-LIKE GREENHOUSE GAS EMISSIONS* (MTCO 2 e)
25,000
23,130
22,632
21,755
21,002
20,318
20,000
18,491
16,722 17,341
15,000
10,000
6,888
6,631
6,110
4,643
5,000
Scope 1
Scope 2
Scope 3
2018
2019
2020
2021
* GHG emissions are calculated on a like-for-like basis each year. 2020 and 2021 emissions outcomes were impacted by low building utilization rates during the COVID-19 pandemic, and thus are not representative of consumption at full occupancy.
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ENVIRONMENTAL
ESG STRATEGY
SOCIAL
GOVERNANCE
APPENDICES
INTRODUCTION
WATER PERFORMANCE
2021 WATER CONSUMPTION* (m 3 )
6% reduction in water consumption compared to 2020
800,000
641,312
581,193
600,000
400,000
318,388 297,835
200,000
2018
2019
2020 2021
LIKE-FOR-LIKE WATER USE INTENSITY* (kgal/ft)
0.12 kgal/ft 2 2021 water use intensity
0.4
0.3
0.26
0.23
0.2
0.13 0.12
0.1
2018
2019
2020 2021
* Water usage is calculated on a like-for-like basis each year. 2020 and 2021 water usage outcomes were impacted by low building utilization rates during the COVID-19 pandemic, and thus are not representative of consumption at full occupancy.
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EMPIRE STATE REALTY TRUST: 2021 SUSTAINABILITY REPORT
WASTE PERFORMANCE
2021 WASTE PERFORMANCE* (tons)
36% waste diversion rate in 2021
1,962 tons
Landfill ( 64% ) Recycling ( 36% )
We recycle tenant waste and construction debris throughout our entire portfolio. Our goal is to increase recycling diversion rates and the types of materials recycled, both in daily waste and in renovation and new construction.
* Waste generation is calculated on a like-for-like basis each year. 2020 and 2021 waste generation outcomes were impacted by low building utilization rates during the COVID-19 pandemic, and thus are not representative of consumption at full occupancy.
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ENVIRONMENTAL
ESG STRATEGY
SOCIAL
GOVERNANCE
APPENDICES
INTRODUCTION
Sustainability Guidelines & Policies
Our initiatives and associated processes set forth our steps to meet our sustainability commitments. We have developed Sustainability Guidelines, High-Performance Sustainable Healthy Design and Construction Guidelines for tenant fit-outs and a Vendor Code of Conduct to ensure that property purchased goods and services are held to the highest standard of ethics and sustainability performance. We utilize our comprehensive approach to sustainability and ESG whenever we evaluate potential acquisitions. We aim to implement our program of decarbonization goals, healthy spaces to live and work, and the highest standards of IEQ for our tenants, water safety and conservation, and diversion of waste from landfill on completed acquisitions.
Our Sustainability Guidelines and Policies provide requirements and recommendations for the following:
• Indoor Environmental Quality (IEQ) • Indoor Air Quality (IAQ) Monitoring • Tobacco-free and Smoke-free Environment • Low-VOC Emitting Materials • Green Cleaning • Integrated Pest Management (IPM) • Sustainable Procurement
• Environmental Management System aligned with ISO 14001 • Energy and GHG Emissions Management • Water Management • Waste Management • Vendor Code of Conduct • Climate Change Adaptation & Resilience
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EMPIRE STATE REALTY TRUST: 2021 SUSTAINABILITY REPORT
DATA-DRIVEN PERFORMANCE ESRT measures, manages, and evaluates performance against our goals. We use data management platforms and technologies to provide advanced analytics and insights to inform and improve our performance. We partner with a leading energy analysis firm to review energy supply, demand, budgets, and pricing to plan accordingly for energy supply and current and future renewable sources. We leverage industry-recognized frameworks and standards including GRESB, SASB, TCFD, SBTi, and GRI to inform our strategy and evaluate progress against our goals. Annually, we calculate GHG emissions in alignment with the GHG Protocol. To ensure accuracy and transparency in reporting, third-party verification is performed in alignment with the ISO 14064-3 standard and we utilize the following data management platforms: • Software platform that produces key insights and analytics of Building Management System (BMS) data to provide Real Time Energy Management (RTEM) analytics. • Platform for automated, interval level meter data and tenant billing capabilities. • ENERGY STAR Portfolio Manager tracks all energy and water consumption across the portfolio. • Real-Time Metering tracks real-time energy consumption. • Demand Response with real time peak load management and demand response program has been in place for over a decade.
For a full listing of our partners and vendors, please see page 58 of this report
ENVIRONMENTAL MANAGEMENT SYSTEM
We use an Environmental Management System (EMS) to formalize our sustainability strategy. The EMS is based on the ISO 14001: 2015 international standard.
1 PLAN
2 DO
3 CHECK
4 ACT
• Establish goals and targets • Develop sustainability
• Identify roles and responsibilities • Educate and engage employees and tenants • Implement innovative technology • Undertake projects
• Track and monitor performance – real time energy management, benchmark in ENERGY STAR Portfolio Manager • Conduct energy, waste, and water audits • Implement efficiency measures
• Evaluate performance • Continuous improvement • Annual sustainability program review • Report – GRESB, Annual Sustainability Report • ENERGY STAR Partner of the Year, 76% ENERGY STAR certified, 100% WELL Health Safety Rating
guidelines (standard operations procedures)
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ENVIRONMENTAL
ESG STRATEGY
SOCIAL
GOVERNANCE
APPENDICES
INTRODUCTION
ESRT purchases wind power to provide 100% renewable electricity to the portfolio.
ENERGY We focus our efforts on ROI-driven energy efficiency strategies, cutting-edge technology, and advanced analytics to achieve portfolio- wide quantifiable performance improvements. Our holistic energy efficiency approach is as follows:
MONITOR ENERGY CONSUMPTION We leverage advanced analytics and track energy data in ENERGY STAR Portfolio Manager to understand performance.
EVALUATE PERFORMANCE We perform energy audits and implement energy conservation measures. 100% of our properties have conducted energy audits in the last three years.
REDUCE PEAK DEMAND AND IMPROVE GRID RESILIENCE Demand Response programs reduce our energy consumption, costs, and emissions. 100% of our properties in the NY region participate in Demand Response and demand management programs.
TENANT ENGAGEMENT We partner with our tenants to educate them and drive ROI-based energy efficiency practices.
RENEWABLE ENERGY We offset our emissions through Green-e certified RECs. Since January 1, 2010, the Empire State Building has purchased over 41,000 Mwh of RECs to offset 100% of the electricity used in the building and nearly 17,000 MTCO 2 e. As of January 1, 2021, we offset 100% of the electricity used in our portfolio through clean renewable wind power RECs.
REAL TIME ENERGY MANAGEMENT (RTEM) Real-time energy consumption feedback allows us to realize cost and energy savings opportunities. We partner with NYSERDA to implement. RTEM incentives for control upgrades, chiller plant optimization, tenant energy management, tenant air handling units, lighting controls, plug load monitoring, and ongoing services that use predictive analysis and diagnostics.
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EMPIRE STATE REALTY TRUST: 2021 SUSTAINABILITY REPORT
We perform energy audits on a regular basis (at a minimum every 3 years), procure RECs to offset emissions from electricity consumption, and partner with policymakers to drive a renewable and resilient grid. Our plan to accomplish our 2035 carbon neutrality target is to continue to implement these measures, perform evaluations of emerging technologies, and scope opportunities for on-site or community-based renewable energy and storage where viable. Our Chairman, President and CEO is the Chair of the Real Estate Roundtable’s Sustainability Policy Advisory Committee that focuses on federal legislation and engagement with commissions, departments, and agencies on the federal level. We have promoted energy efficiency throughout our portfolio since 2007 when New York City began its climate leadership under Mayor Bloomberg. ESRT’s participation included work on programs such as:
We implement Real-Time Energy Monitoring, conduct Measurement and Verification (M&V) audits and Tenant Engagement Management analytics, and perform quarterly M&V on energy projects. We partner with ConEdison and New York Independent System Operator (NYISO) on over 8 million square feet of our portfolio in their Demand Response (DR). With DR, we reduce our assets’ electricity usage through peak periods, reduce stress on the grid, and help prevent disruptions to service such as, brown outs and blackouts. All assets have access to a Real-Time meter data (RTM) tool designed for proactive demand management during demand response events.
GLOBAL Science-based Targets Initiative
FEDERAL DOEs Better Buildings Challenge & Better Climate Challenge
NEW YORK CITY NYC’S Green Code Task Force (for the development of PlaNYC, LL84, LL87, etc.)
80x50 Technical Working Group
NYC Mayor’s Carbon Challenge
Climate Mobilization Act LL97 Advisory Board
NYSERDA Empire Building Challenge
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ENVIRONMENTAL
ESG STRATEGY
SOCIAL
GOVERNANCE
APPENDICES
INTRODUCTION
We implement water efficiency strategies to support our water reduction goals and minimize our impact on the environment. Our water efficiency initiatives include a combination of retrofits, submeters, and pilot technology.
Low-flow retrofits/upgrades As part of our standards, we continue to implement ultra-low- flow fixtures that we estimate to be 40–50% better than Code and are EPA WaterSense labeled.
Water submeters To monitor and measure water consumption by end use and identify areas for targeted reduction, we install water submeters for key water-using systems. We track progress from water efficiency upgrades, identify leaks from specific systems, and readily identify opportunities to increase water efficiency. Advanced software-based water use monitoring We have implemented an artificial intelligence software to detect and stop water leaks in select spaces, monitor water use, and analyze water use trends. This technology enables our property managers and engineers to expertly manage water consumption and make informed operational decisions in real time. As of December 31, 2021, 30% of our portfolio has implemented this smart technology. We plan to extend implementation of this technology across our entire portfolio to further reduce process water usage over the next year.
WATER The reduction of water consumption in buildings reduces overall environmental impact, drives operational cost savings, and contributes to the reduction of risk from fluctuations in water supply. Water usage reduction and water runoff quality and quantity management are critical issues. We address each of these through water processing, water fixtures, green roofs, and native xeriscape planting (where applicable). To implement our water policy and implement conservation initiatives we partner with our property managers and building engineers to understand the factors that influence asset water usage through collection of readily available information and inventory of all water fixtures, equipment, and systems and provide guidance on the following: • Set and track towards performance goals • Keep water data updated in ENERGY STAR Portfolio Manager • Fix identified leaks • Install or retrofit existing fixtures for ultra-low-flow models where possible • Ensure best practices for water conservation • Engage and educate tenants on opportunities for specifications and behaviors to drive water efficiency • Continue to research, pilot, and implement strategic water management technologies and strategies in base building and tenant spaces
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EMPIRE STATE REALTY TRUST: 2021 SUSTAINABILITY REPORT
WASTE We commit to minimize waste generated at our properties through waste reduction, recycling, composting, donation, and other initiatives to divert waste from landfills. Our Sustainable Waste Management Policy outlines the necessary steps for implementation, with responsibilities delegated to our property managers, project managers, custodial staff, tenants, and any third-party waste vendors to improve waste diversion. We place clearly labeled accessible bins for trash, paper, and combined plastic, metal, and glass recycling at all of our assets and loading docks and comply with applicable local Codes and regulations. The installation of waste decals from the Business Integrity Commission (BIC) at our New York City properties provides an opportunity for us to identify single stream or separated recycling to assist building occupants and maintenance. We provide an array of education and engagement programs for our tenants on topics which include recycling, composting, donation programs, and special diversion of regulated waste such as lamps, batteries, and electronic waste. We deploy proactive practical waste diversion strategies that meet or exceed local regulations. We provide training and set best practices and standards for our employees and outside contractor teams to reduce overall waste generation and increase diversion rates. We identify opportunities to track and report waste at each property to ensure that all waste is being collected and diverted in accordance with ESRT’s guidelines. • We commit to perform waste audits at 100% of our buildings to understand waste performance and identify opportunities for improvement. • Waste audits were not completed in 2020 due to low occupancy. Waste audits were completed at each building in 2021 when occupancy reached levels sufficient for impactful results. • We have implemented pilot compost programs with some of our largest tenants and offer furniture reuse and donation programs, and electronic waste collection opportunities.
WASTE INITIATIVES
ANNUAL WASTE AUDITS ESRT partners with Great Forest to annually complete Waste Audits to verify and understand the waste performance at our buildings, identify opportunities to increase diversion rates.
TENANT PILOT COMPOST PROGRAMS
ESRT partners with tenants to deploy composting programs to reduce the amount of food waste.
TENANT ENGAGEMENT AND EDUCATION ESRT provides education on
BUILDING STAFF ENGAGEMENT ESRT building staff annually
waste management and recycling practices to ensure our tenants are equipped with the knowledge to reduce waste.
receives training on proper waste management to ensure waste/ recycling is handled correctly from start to finish.
MONTHLY WASTE DATA AND DIVERSION RATES At year end ESRT provides tenants with monthly waste data and diversion rates.
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ENVIRONMENTAL
ESG STRATEGY
SOCIAL
GOVERNANCE
APPENDICES
INTRODUCTION
High-Performance Healthy Buildings
ESRT is committed to provide tenants with healthy work environments focused on the health and wellness of the people who occupy our buildings every day. Healthy buildings where we can work together and collaborate help to restore company culture after widespread office closures, increase productivity, and drive the bottom line. ESRT developed a program of strategies rolled out across the portfolio, in alignment with the Fitwel Certification (83% of NYC portfolio certified), WELL-Health Safety Rating (100% of portfolio certified) and industry-leading best practice. These strategies are illustrated in the figure to the right. INDOOR ENVIRONMENTAL QUALITY (IEQ) For more than a decade, improving IEQ has been a key tenet of our sustainability strategy. Our industry-leading, comprehensive, and state-of-the-art program focuses on operational best practices to ensure healthy and productive spaces, including MERV 13 filters, bipolar ionization air purification technology, indoor air quality (IAQ) testing, CO 2 sensors, green cleaning practices, integrated pest management strategies, and low-emitting materials. In 2020, ESRT was the first commercial real estate portfolio in the Americas to achieve the WELL Health-Safety Rating across 100% of its portfolio and one of the first to recertify. The WELL Health-Safety Rating, developed by the International WELL Building Institute, is an evidence based, third-party rating focused on operational policies, maintenance protocols, emergency plans, and stakeholder education to address a post-COVID-19 environment and broader health and safety-related issues in the future. When faced with the most intense pandemic in over a century, ESRT developed a pathway for our employees, visitors, and tenants to return to the office with confidence. We are partners with the WELL Living Lab and Mayo Clinic to advance the study of the indoor environment’s impact on human health and to help develop practices that can be implemented across the country. ESRT is part of the WELL Living Lab Alliance, a global consortium of organizations that support the advancement of knowledge of IEQ to improve human health and well-being. Our engagement in this effort will extend the WELL Living Lab’s pioneering research at the intersection of health, building, and behavioral sciences. Through our partnership with Delos and WELL Living Lab, a company dedicated to the scientific research, evaluation, and solutions surrounding IEQ impacts on building occupants’ health and well-being, we help the industry provide guidance that our tenants can depend on to promote functional, energy-efficient, and human health–enhancing spaces. We continue to monitor and track performance as science, data, and knowledge evolve.
HEALTHY BUILDING MEASURES HUMAN EXPERIENCE • CO 2 Our portfolio is 100% WELL Health-Safety Rated and 83% of our NYC portfolio is Fitwel certified. -based Demand Control
Ventilation to ensure adequate introduction of fresh outside air for ventilation • Advanced LutronVive
AIR PURIFICATION • Active bi-polar ionization air purification system to improve air quality lighting control system to optimize daylight, glare and productivity balanced with energy efficiency
HEALTHY MATERIALS/ PRODUCTS • Sustainable purchasing, such as low or no VOC and no Red List materials in tandem with our High-Performance Sustainable Healthy Design and Construction Guidelines
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