GOVERNANCE
INTRODUCTION
ESG 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. In 2021, we responded to the GRESB Assessment which evaluated our organization against TCFD criteria and our approach to climate-related social risks. Our assessment is below.
CATEGORY
MANAGEMENT OF POTENTIAL IMPACT
Acute Weather Events Flooding, Hurricanes, Winter Storms, Extreme Temperatures
We have developed a Climate Change Adaptation and Resilience policy for standing investments and a Climate Change Risk Assessment Checklist to be 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.
Geographic Concentration Risk
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.
Physical Security and Terrorism
Due to the high-profile nature of our standing investments, particularly the Empire State Building, we have identified physical security and terrorism as a potential Social Risk. Mitigation strategies employed by ESRT include a Director of Security at the Empire State Building, formal crisis management plans, in-person electronic surveillance at all entry points, active shooter trainings for employees and tenants, and Terrorism Reinsurance Act coverage that covers nuclear, biological, chemical or radiological weapon attacks. We perform annual Indoor Air Quality (IAQ) testing at all standing investments to evaluate exposure and risks to human health. All IAQ tests are reviewed to ensure contaminants remain below the most stringent acceptable levels. For any assets that do not meet our performance thresholds, actions are taken to address and remediate issues. We have deployed active bipolar ionization air purification technology across one million square feet of our portfolio.
Human Health
Cybersecurity
We have firewall and penetration testing, cybersecurity insurance, internal employee trainings on safeguarding information, a Director of Information Security dedicated to cybersecurity, cyber training modules, and a continual assessment of new cybersecurity tools.
Policy Risks Energy and Climate Legislation
We evaluate energy and climate legislation in regions and cities where we operate, including evaluating the compliance status with legislation concerning our carbon footprint and measuring the financial impact of energy and climate legislation including the NYC Climate Mobilization Act.
Technology Risks Capital Investments in Low-Carbon Technology
We evaluate innovative technologies to help mitigate climate-related risks. These include advanced optimization and machine learning technologies, battery storage, renewable energy, lighting and controls, building management systems, equipment and tenant plug loads and controls.
Market Risks Abrupt/unexpected changes in energy costs
We evaluate abrupt or unexpected changes in energy costs and market perceptions by investors. We plan long-term contracts for certainty, predictability, and risk mitigation on utility pricing.
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