As a net-lease REIT, we do not control the operations and activities at our properties, and accordingly, we do not have the ability to mandate the sustainability practices of our tenants. However, we recognize that commercial real estate assets can have a substantive impact on the environment and on the health and safety of building occupants. We believe that being aware of, and addressing, these issues are important aspects of building a successful and sustainable business. Further, as described more fully below, we believe that supporting our tenants’ efforts to implement sustainability initiatives enhances their operations and 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.
Our sustainability strategy in 2021 will include, among other things, an evaluation of our sustainability disclosures in comparison with 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 believe greater alignment in our disclosures with these published standards is appropriate. We intend for our efforts in 2021 to have a meaningful impact in reaching our sustainability targets, most particularly reducing our own carbon footprint and 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:
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:
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 and the ability to institute energy conservation and environmental management programs at our properties. Generally, our leases also require the tenants to fully comply with all environmental laws, rules, and regulations, including any remediation requirements. 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 open environmental matters. On all properties that we acquire we obtain an environmental assessment from a licensed environmental consultant to understand any environmental risks and liabilities associated with a property and to ensure that the tenant will address any environmental issues on our properties.
The Essential Sustainability Loan Program. Beginning in the second quarter of 2021, we expect to launch our Essential Sustainability Loan Program. Through this program we intend to offer 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. We expect that our initial commitment to this program will be $50 million to $60 million. The primary objective of the Essential Sustainability Loan Program is 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 must 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. The Company is currently engaged in identifying a “Sustainability Partner” for the program that will assist participating tenants in evaluating the costs and benefits of their targeted sustainability solution, acquiring the necessary products and services, and implementing/installing the solution. The Sustainability Partner will also assist the tenant in identifying, applying for, and obtaining any related grants, credits or similar financial incentives or payments that may be available from utility companies, governmental authorities, or other parties. We expect that any grants, credits, financial incentives, or other related payments received by the tenant will be required to be used to pay down the principal of the sustainability loan upon receipt.