Environmental Stewardship

Understanding that as a net-lease REIT, we do not control the operations and activities at our properties, nor do we have the contractual right to mandate the sustainability practices of our tenants, we do recognize that commercial real estate assets can have a substantive impact on the environment and on the health and safety of the occupants of our properties. We believe that being aware of, and addressing, these issues are important aspects of building a successful and sustainable business. Firstly, as described more fully below, we believe that supporting our tenants’ efforts to implement sustainability initiatives is consistent with our aim to be the preferred capital provider to our tenants and provides an opportunity for our tenants to enhance their operations, lower certain operating costs, and thus their prospects for success and therefore our own. In addition to assisting our tenants with their sustainability initiatives, we recognize that our Company has a carbon footprint that we are committed to reducing. Our commitment to environmental stewardship starts at our corporate headquarters, in Princeton, New Jersey, and extends to our portfolio of income properties, our investment and leasing practices, and to our tenants.

As part of our sustainability strategy in 2021, we modified our standard lease form to provide us with the contractual right to implement sustainability measures at our properties and to require our tenants to provide us, at least annually, with their energy consumption information, including but not limited to: consumption of electricity and water. Our 2021 Annual Report on Form 10-K will incorporate disclosures concerning our sustainability efforts to date, and reflect our evaluation of the frameworks disseminated by the Task Force on Climate-Related Financial Disclosures (“TCFD”) and the Sustainability Accounting Standards Board (“SASB”). We recognize that the TCFD and SASB provide an important reference for sustainability disclosures and we believe greater alignment in our disclosures with these published standards is appropriate. We intend for our efforts in 2022 to have a meaningful impact in reaching our sustainability targets, most particularly reducing our own carbon footprint at our corporate office and, where possible, those of our tenants.

Our Headquarters. We emphasize sustainability at our corporate headquarters through several measures, including our own office operations and the operation of the building in which we rent space. The sustainability practices in our office seek to minimize our environmental impact and reduce our carbon footprint and include the following:

  • Energy efficient lighting and lighting control systems that automate the activation and termination of lighting in our individual offices, conference rooms and common areas;
  • Deploying minimized HVAC and heating run times—our HVAC systems go into a night set back daily and there is no run time on the weekends;
  • We have an active single-stream recycling program for paper, plastic and cans;
  • We purchase Energy Star certified computers, monitors and printers;
  • We use Energy Star power management settings on our computers and monitors;
  • We dispose all ink cartridges utilizing the manufacturer’s recycling program; and
  • We have installed water machines and have eliminated the use of plastic or Styrofoam cups and plastic water bottles.

Our headquarters building is certified under the EPA’s Energy Star certification program, indicating that it uses 35% less energy and generates 35% fewer greenhouse gas emissions. To receive this designation, the following components must be met:

  • Use of energy efficient LED lighting.
  • Use of environmentally friendly cleaning products. The products must meet the Green Seal certification standards.
  • Variable frequency drives and more energy efficient motors are purchased and installed in all cooling tower units.
  • Mandatory shut down of all lighting and HVAC systems daily.
  • The building utilizes a lamp recycling company for compliant disposal of all spent tubes and electronic ballasts.
  • To minimize generation of waste and release of pollutants, the building requires all paint to be low VOC. 
  • Storm water retention is managed through water runoff from roofs and paved areas and are routed to various underground drainage basins. All water runoff is naturally filtered and returned to the aquifer.
  • Green-friendly native and drought-tolerant plants are used in landscaping to minimize watering needs.

Our Properties. The properties in our portfolio are generally leased to our tenants under long-term triple net leases which give our tenants exclusive control over the operations within the property and, for those properties not subject to our modified lease form, the sole ability to institute energy conservation and environmental management programs at these properties. Generally, our leases also require the tenants to fully comply with all environmental laws, rules, and regulations, including any remediation requirements. The underwriting process for all of our investment activity includes obtaining environmental assessments from a licensed environmental consultant to understand any environmental risks and liabilities associated with a property and to ensure that the tenant has or will address any environmental issues on the properties. Once we have acquired a property, our asset management department actively monitors any environmental conditions on our properties to make sure that the tenants are meeting their obligations to remediate or remedy any active environmental matters. With the modification implemented in our standard lease form, beginning in 2022, we intend to evaluate the opportunities to implement sustainability measures at the properties subject to such modified lease and to commit capital to complete such improvements at our properties.

The Essential Sustainability Loan Program. Beginning in the second quarter of 2021, we pursued our initial sustainability program for our income property portfolio by presenting our tenants with a Sustainability Loan Program, offering our tenants the ability to obtain a Sustainability Loan from us to support a tenant’s implementation of sustainability initiatives at the property or properties it leases from us. The primary objective of the Essential Sustainability Loan Program was for us to provide financing to our tenants to achieve their sustainability goals, which we believe will provide our tenants with strategic opportunities, including reducing their carbon footprints, rationalizing certain operating costs, and deploying sustainable features that may promote increased brand identity and customer adoption or loyalty. A tenant’s use of the loan proceeds would be required to be for products, equipment and services that serve specific sustainability initiatives. Examples include lighting and lighting control systems, HVAC equipment and related insulation, water efficiency systems, electric vehicle charging stations, and solar energy solutions. We are currently evaluating new sustainability programs to present to our tenants in addition to the loan program whereby we will be able to deploy sustainability measures at our properties while also providing our tenants with the same opportunities for reducing their carbon footprint and improving their profitability and/or brand identity.

Essential Properties Realty Trust
47 Hulfish Street, Suite 210
Princeton, NJ 08542