Climate Change Data

Environmental Metrics

ESG Focus Areas

• Lending Practices
• Discriminatory Lending
• Environmental Risk to Mortgaged Properties
• Energy Management
• Water Management
• Management of Tenant Sustainability Impacts
• Climate Change Adaptation
• Employee Diversity & Inclusion
• Incorporation of Environmental, Social, and Governance Factors in Investment Management & Advisory
• Incorporation of Environmental, Social, and Governance Factors in Credit Analysis

Environmental Achievements

• Maintained carbon neutrality (Scope 1 and 2 emissions and Scope 3 for travel) for the past two years.

Social Achievements

• Provides affordable housing to underserved and low-income communities, with programs such as free rent for veterans and after-school care.
• Engaging with tenants to improve sustainability and cost savings (e.g., installing low-flow fixtures, LED lighting).

Governance Achievements

• Established an ESG Committee in 2020, reporting to executive management and the Board of Directors.
• Incorporates ESG factors into investment and credit analysis processes.

Climate Goals & Targets

Environmental Challenges

• Limited ability to amend long-term lease agreements to include green lease clauses.
• Increasing data coverage of mortgage-related and energy/water metrics.
• Lack of comprehensive enterprise risk management framework for climate-related risks.

Mitigation Strategies

• Exploring ways to implement green lease clauses in new and refinanced properties.
• Utilizing third-party ESG data management software to track and analyze energy and water data.
• Developing an enterprise risk management framework to incorporate climate-related risks.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Flood risk
• Wildfire risk
• Loss of power
• Water stress and increased drought exposure
• Hurricane risk

Transition Risks

• Increased regulatory requirements
• Increased environmental and remediation requirements
• Increased CapEx for physical damage
• Higher operating expenses
• Potential for mortgage default

Reporting Standards

Frameworks Used: SASB, TCFD

Environmental Metrics

ESG Focus Areas

• Investing in renewable energy and integrating environmental due diligence into lending practices
• Financial inclusion (making homeownership possible for those without access to traditional bank loans)
• Affordable housing

Environmental Achievements

• Financed nearly $840+ million of renewable energy assets (wind, hydro, solar, geothermal) as of 6/30/2022, generating over 11,2000 Gigawatt hours and avoiding approximately 11.2 million tons of CO2 emissions.
• Reduced water usage by 35% on average where efficient fixtures were installed, realizing an average water bill savings of 37% in 2021 (approximately $20 million in 2021-dollar values).
• Became a certified carbon-neutral firm, offsetting 100% of Scope 1 and 2 operational footprint and Scope 3 Category 6 business travel emissions.

Social Achievements

• Deployed $12 billion in residential lending to high-quality borrowers (small business owners, contractors, gig economy workers) who struggle to access traditional housing credit.
• Established an affordable housing fund (79.4% interest) with assets valued at $2.3 billion at inception, consisting of 15,027 rent-restricted multifamily units (housing approximately 35,000 people) making the company a top 10 owner of affordable housing in the US. As of 6/30/2022, 98% of these homes are occupied by households earning 60% or less of the area median income.
• Provides support services to residents, including the Soldiers to Scholars program and free transportation to medical and retail destinations at senior communities.

Governance Achievements

• Aligning ESG disclosures to SASB and TCFD frameworks.
• Strong policies and practices related to fair, ethical, and honest business dealings, robust governance, and compliance with applicable laws.
• Competitive compensation, including a performance-based bonus program for over 80% of employees, and several competitive non-compensation benefits.

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: SASB, TCFD, UN PRI

Third-party Assurance: ISS (Second-Party Opinion)

UN Sustainable Development Goals

• 7
• 9
• 11
• 12
• 13
• 17

The company's initiatives align with these SDGs through investments in renewable energy, affordable housing, energy efficiency, and sustainable water management.