Building a Strong Foundation for ESG Integration

Building a Strong Foundation for ESG Integration

Wednesday, April 20, 2022

At Slate, we create value by creating spaces where people want to be – where our tenants and the surrounding communities can thrive.

Getting this right requires earning the trust of the community and demonstrating respect for the environment. It means listening to our stakeholders’ interests, ideas, and aspirations, and understanding how we can contribute to building stronger, more resilient communities. Given this imperative, we have been highly attuned to the importance of Environmental, Social and Governance (ESG) impacts and opportunities across our business.

As we have evolved and grown as a firm, so too has our focus on ESG. In 2019, we published our first summary ESG Report, which highlighted the many ESG initiatives underway across our firm. The 2021 edition of that Report is set to launch in the coming months. Over the past year, we have also taken several additional steps to strengthen and formalize our commitment to ESG, including appointing Slate’s first Global Head of ESG, Bozena Jankowska, who brings nearly two decades of experience at the intersection of finance and sustainability to our firm. Today, we are introducing an updated and more ambitious iteration of our corporate ESG Policy.

This Policy, which applies to Slate’s global operations and investment activities – including our employees, business partners, tenants, and service providers – aims to more formally embed industry-leading ESG strategies and practices across our entire footprint. It provides a framework for holding ourselves to high standards of ownership, accountability, and responsibility. Our ESG Policy identifies the material issues facing our business and explains how we will integrate global standards while setting out frameworks for ESG governance and reporting. Critically, it also links remuneration to ESG outcomes.

The Policy lays out a series of concrete commitments across four key areas: climate change, resource efficiency, social impact, and ethical business conduct. On the critical issue of climate change, the Policy includes requirements to evaluate and consider transition and physical climate risks, track carbon emissions, invest in and deploy new technologies that tackle climate change, prioritize energy efficiency in building design and retrofits, and include climate-related considerations in leases. We have already made headway toward this commitment with the launch of our Cities and Communities Impact Infrastructure Strategy earlier this year. This strategy will invest in proven technology solutions that drive reductions in carbon emissions and facilitate the growth and deployment of these technologies by integrating them across our existing global real estate portfolio. 

When it comes to resource efficiency, the Policy outlines expectations for including energy and water consumption in investment decisions, as well as tracking and reducing consumption and waste over time. It also includes requirements to evaluate and enhance biodiversity and habitats at properties, pursue green building certifications, and integrate green lease concepts into tenant agreements.

In the area of social impact, Slate’s ESG approach focuses on enhancing quality of life and neighborhood revitalization, prioritizing local hiring and supply chains, and engaging with stakeholders to support healthier, safer, and more resilient communities.

The final component, covering ethical business conduct, sets the highest standards for integrity in our governance. It also includes provisions for more rigorous screenings of our investors, property managers, tenants, developers, service providers and other partners.

The need for ESG leadership in the real estate industry has never been more clear. As governments and the private sector increasingly adopt net zero emissions targets, the real estate sector will have a major role to play, particularly when you consider that approximately 40% of global CO2 emissions come from buildings. To meet the climate commitments of the Paris Agreement, buildings must achieve net-zero emissions by 2050.

At Slate, we see firsthand that investors are increasingly taking climate risk in real estate into consideration as they allocate their capital. Demands for energy efficiency and green technologies in the built environment are increasing every day, and “green leases,” which include environmental performance criteria, are becoming more common. Green buildings, those that use recycled and low carbon construction materials and prioritize water and energy efficiency, already command premium rents and valuations.

While the real estate sector explores strategies to reduce emissions, we must also grapple with how to adapt our existing properties to be resilient in the face of climate change impacts, such as extreme weather, flooding, and fires, many of which are already here. In anticipation, the sector can expect increased regulation and new building code requirements, which we are already seeing play out. Slate’s focus on acquiring properties first and foremost at an attractive basis provides our firm with the flexibility to invest in building retrofits that make our properties healthier, more resilient, and future proof.

We are confident that a rigorous approach to ESG will further enhance the value we provide to our investors, tenants, communities, and employees by reducing our environmental impact, creating sustainable spaces where tenants and communities thrive, and creating a superior culture and work environment for our team members. This Policy is one step of many that we are taking to ensure we are well positioned to address these challenges and many others in the years ahead. To learn more and read our full corporate ESG Policy, please click here.

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