SL GREEN REALTY CORP. 2019 SUSTAINABILITY REPORT
ESG Risk Rating
The Sustainalytics ESG Risk Rating score measures how companies are managing financially material Environmental, Social, and Governance risks relative to peers in the same sector. Due to our effective management and minimal exposure to risk, SL Green has a low risk rating.
Cybersecurity At SL Green, implementing robust cybersecurity measures is an integral component of our risk management strategy. As we transmit sensitive data across networks and rely on Internet-based systems to run our buildings, we are dedicated to protecting this information and the systems used to process it. We also ensure our employees, processes, systems, and external partners are aligned with cybersecurity best practices. Our Board of Directors and Executive Management Team regularly assess our program and are positioned to respond to security and privacy risks, identify vulnerability gaps, and assess data governance programs. Cybersecurity Awareness To ensure our employees are equipped with the tools to identify cybersecurity threats, we issue quarterly trainings that are mandatory for all employees. All employees also receive monthly security awareness tips to help identify phishing, deceptive emails, and corrupted links. Vulnerability Management We constantly scan our systems for vulnerabilities and ensure that any identified risks are immediately addressed. During monthly maintenance windows, we ensure that all our internal systems are patched adequately. Security Assessments At SL Green, we periodically employ external agencies to test the efficacy of our security protocols. Any weaknesses found by these agencies are addressed through corrective action plans and systematic changes.
Risk Mitigation With growing risks associated with cybersecurity, we mitigate our exposure by offsetting the potential costs involved with recovery after a cyber-related security breach or similar event by purchasing cyber liability insurance coverage. Cloud Migration With the advancement and availability of cloud technologies, we leverage the power of the cloud to employ sophisticated cybersecurity measures. For more information, please refer to SL Green's 10-K filings.
Demand for Sustainable Office Space in New York
Our approach to risk management identifies, analyzes, and responds to risks and opportunities that exist across financial, operational, and compliance levels. Using a precautionary approach, our team proactively implements response proce- dures and makes long-term planning decisions. This risk management framework is integrated into organizational decision-making processes, and fortifies the future stability of our business.
New York City’s geography exposes it to potential coastal weather risks such as hurricanes and flooding. Climate change can intensify these risks, which could affect the demand for office space in New York. Changing consumer and investor demands are increasingly driving companies to enhance their buildings with climate mitigation strategies. Our approach is to operate, maintain, and build assets to meet market demands for sustainable and resilient office spaces. We also collaborate with prospective and existing tenants to meet their sustainability goals through capital investments, data sharing, education, and green operations. Climate-Related Regulations New York City’s commitment to reduce citywide emissions 80% by 2050 is one of the most stringent climate goals for any large city in the world. In order to achieve these reduc- tions, City Council passed the Climate Mobilization Act (CMA) in April 2019, prescribing annual caps on building greenhouse gas emissions starting in 2024. At the state level, the Climate Leadership and Community Protection Act (CLCPA) was passed in June 2019, calling for a 70% renewable electric grid by 2030. SL Green’s proven track record of energy efficiency and emissions reduction over the past two decades minimizes the impact of the recent legislation on our portfolio. Taking it a step further, climate-related regulations provide an opportunity to engage our tenants on energy management and emissions reduction best practices, further decreasing the environmen- tal impact of our portfolio.
Climate Risks and Opportunities
Managing Climate Change Risk Through Resiliency Planning Our team manages the risk associated with climate-related weather events by relocating critical building infrastructure, purchasing insurance plans, installing generators, and train- ing building management and security staff on emergency response protocol. We also allocate funds through 5-year and 10-year capital plans for resiliency and energy efficiency projects. These capital improvements reduce greenhouse gas emissions, mitigate our impact on climate change, and increase resiliency at our properties.
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