Climate Change Data

Environmental Metrics

ESG Focus Areas

• Residents’ well-being
• Employee well-being
• Environmental stewardship
• Investor returns
• Diversity, Equity, and Inclusion (DEI)
• Climate Change

Environmental Achievements

• Reduced energy consumption by 3% overall and 7% in like-for-like properties from 2020.
• Reduced GHG emissions by 4% from 2020.
• Increased renewable energy generation by 26% from 2020, generating 8,494 MWh of clean energy.
• Invested more than $10 million in solar energy systems in 2021.
• Improved or updated HVAC and lighting systems in properties.
• Implemented 17 new water-saving irrigation and landscaping projects.
• Invested more than $4.3 million in water efficiency improvements since 2016.
• Achieved or are targeting LEED or other green certifications for 32 communities, representing nearly 10,000 sustainable apartment homes.

Social Achievements

• Provided over $500,000 to residents through the Resident Assistance Program.
• Provided over $130,000 to small business tenants through the Small Business Assistance Program.
• Contributed over $140,000 to employee emergency assistance, regional food banks, DEI organizations, and environmental organizations.
• Facilitated the relocation of low-income residents at a shared cost of approximately $1 million.
• Provided $25 million in rent subsidies, covering more than 2,500 affordable homes.
• Achieved an 88% response rate in Q1 2022 employee engagement survey.
• Provided 36,349 hours of training for employees.
• Promoted 15% of employees to higher positions.

Governance Achievements

• 78% of board directors are independent.
• 22% of board directors self-identify as diverse.
• 0% pay gap between genders.
• 51% of managerial positions held by people of color.
• Implemented sustainability-linked pricing component in $1.2 billion unsecured line of credit facility.

Climate Goals & Targets

Environmental Challenges

• Ongoing regulatory challenges from COVID-19, resulting in increased costs and complexity related to environmental mandates and key operating targets.
• COVID-19 pandemic impacted the development of new apartment homes, especially in Northern California.
• Persistent housing shortages in California.

Mitigation Strategies

• Responded thoughtfully to challenges while maintaining focus on ESG initiatives.
• Provided personal protective equipment and training for associates and residents, encouraged COVID-19 vaccination.
• Expanded online and self-service options for resident interactions.
• Developed the Essex Cares Program, pivoting to employee well-being, local community support, and affordable housing initiatives.
• Leveraged early relocation grants, short-term rental subsidies, and HIF’s AHI program to ensure no resident would be without stable and safe housing.
• Invested in apartment development directly and by providing financing to third-party developers.

Supply Chain Management

Supplier Audits: More than 90% of third-party vendors were local in 2021.

Responsible Procurement

• Vendor Code of Conduct

Climate-Related Risks & Opportunities

Physical Risks

• Increased storms
• Wildfires
• Increased cooling degree days
• Increased heating degree days
• Drought/precipitation variability
• Extreme heat days
• Riverine flood
• Coastal flood
• Sea level rise
• Water stress

Transition Risks

• Increased administrative costs associated with required climate disclosure regulations
• Increased energy costs due to stringent renewable portfolio standards
• Higher energy prices due to decarbonization of electric sector and grid development
• Increase in administrative and compliance costs for meeting building benchmarking, audit and retro commissioning planning ordinances
• Increase costs for energy and carbon retrofits due to changes in energy and carbon intensity requirements or regulations
• Changes to renewable incentive programs
• Increased development and renovation costs due to more stringent building and energy code regulations
• Higher insurance costs and/or reduced availability of insurance coverage
• Higher cost of materials for development projects due carbon pricing programs
• Reduction in value of real estate assets due to not meeting energy or carbon intensity expectations (stranded asset risk)

Opportunities

• Align ESG and climate-related disclosure with voluntary disclosure frameworks
• Expand capabilities and implement information management system(s) to monitor GHG emissions
• Seek external assurance for key environmental and climate change performance metrics
• Explore the viability of participating in Direct Access Lottery programs
• Consider participating in demand response programs
• Increase on-site renewable energy capacity
• Develop monitoring system for applicable rebates/subsidy programs
• Expand capabilities for ongoing tracking of energy and carbon intensity
• Explore the implementation of energy storage systems
• Continue exploration of providing PV solar energy to residents
• Maximize the implementation of viable PV systems
• Incorporate climate-related risk and resilience screening within the due diligence process
• Leverage applicable incentive programs for increasing building resilience
• Implement embodied carbon reduction strategies
• Expand capabilities for tracking of energy and carbon intensity

Reporting Standards

Frameworks Used: GRI (core option), SASB, TCFD

UN Sustainable Development Goals

• Goal 5: Gender equality
• Goal 7: Affordable and clean energy
• Goal 11: Sustainable cities and communities
• Goal 13: Climate action

Essex's initiatives contribute to these goals through various programs and investments in renewable energy, water conservation, affordable housing, DEI initiatives, and community engagement.

Sustainable Products & Innovation

• Smart Home Program

Awards & Recognition

• Healthiest Employers Finalist (Bay Area, Southern California, Washington)
• NAA Excellence Awards winner in the Diversity & Inclusion Category
• Bloomberg GEI member company

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced Scope 1 and Scope 2 GHG emissions by 17.4% from 2018 baseline
• Increased PV solar generation by 235% from 2018 baseline
• Achieved 46.4% waste diversion rate

Social Achievements

• Introduced a new mental health care partnership providing free therapy and resources to employees and their families
• Expanded parental leave program to six weeks for all birth and non-birth parents
• Provided rent subsidies to over 800 employees at a total cost of approximately $5 million
• Donated nearly $300,000 to numerous community groups

Governance Achievements

• Achieved gender pay parity
• 26% year-over-year reduction in workers’ compensation insurance claims
• 40% of Board of Directors are women
• 60% of named executives are women

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions in construction and green power industries
• Increased water usage due to work-from-home trend
• Increased administrative costs associated with climate disclosure regulations
• Increased energy costs due to stringent renewable portfolio standards
• Potential physical risks from extreme weather events (storms, wildfires, floods)
• Potential transition risks from regulatory changes and market shifts

Mitigation Strategies

• Proactive monitoring of PV systems performance
• Implementation of various capital improvement projects to reduce water consumption
• Tenant outreach to encourage water conservation
• Development of action plans to address urgent physical risks
• Cataloging of existing and potential regulations, internal practice surveys, and benchmarking against peers to address transition risks
• Expansion of on-site renewable energy capacity
• Implementation of Crisis Management Planning and emergency preparedness

Supply Chain Management

Supplier Audits: 90% local vendors used

Responsible Procurement

• Vendor Code of Conduct

Climate-Related Risks & Opportunities

Physical Risks

• Storms
• Wildfires
• Riverine flood
• Coastal flood
• Extreme heat/cold days
• Sea level rise
• Water stress

Transition Risks

• Increased administrative costs from climate disclosure regulations
• Increased energy costs from renewable portfolio standards
• Higher energy prices from decarbonization
• Changes to renewable incentive programs
• Increased development/renovation costs from stricter building codes
• Higher insurance costs
• Higher material costs from carbon pricing

Opportunities

• Development of energy-efficient products
• Participation in Direct Access Lottery programs
• Participation in demand response programs
• Increase on-site renewable energy capacity
• Implementation of energy storage systems
• Incorporation of climate-related risk and resilience screening in due diligence

Reporting Standards

Frameworks Used: GRI, SASB, TCFD

Third-party Assurance: LRQA (Lloyd’s Register Quality Assurance)

UN Sustainable Development Goals

• Goal 3 (Good Health and Well-being)
• Goal 5 (Gender Equality)
• Goal 6 (Clean Water and Sanitation)
• Goal 7 (Affordable and Clean Energy)
• Goal 8 (Decent Work and Economic Growth)
• Goal 9 (Industry, Innovation, and Infrastructure)
• Goal 11 (Sustainable Cities and Communities)
• Goal 12 (Responsible Consumption and Production)
• Goal 13 (Climate Action)

Alignment with UN SDGs is described on page 14

Awards & Recognition

• S&P 500 Dividend Aristocrat

Environmental Metrics

ESG Focus Areas

• Energy Efficiency
• Water Efficiency
• Compliance with Laws and Regulations

Environmental Achievements

• 24.2% decrease in Scope 1 and 2 GHG emissions from 2018 baseline
• 298% increase in PV solar generation from 2018 baseline
• 47% waste diversion rate in 2023
• Reduced like-for-like electric usage by 11% since 2018
• Reduced grid power purchase by 5% since 2022
• Source 50% of power from on- and off-site renewables

Social Achievements

• Launched paid parental leave program
• Expanded mental healthcare benefit for associates and their families
• Provided over $25 million in rent subsidies for nearly 2,500 apartment homes
• Donated office space to Coastal Kids Home Care
• Essex associates volunteered nearly 400 hours at local community organizations
• Maintained gender pay parity for the third consecutive year

Governance Achievements

• Continued track record of gender pay parity
• 63% of senior executives are women
• 33% of the Board self-identify as diverse
• 53% of managerial positions self-identify as diverse
• Provided over 1,400 hours of Diversity, Equity, and Inclusion (DEI) training

Climate Goals & Targets

Environmental Challenges

• Reliance on gas for domestic hot water in California
• Cost of electricity higher than gas in many operating markets
• Lack of affordable housing
• Climate change physical and transition risks

Mitigation Strategies

• Developing a strategy to transition away from gas, starting with domestic hot water
• Installing electric heat pump water heaters
• Leveraging rebates and tax incentives
• Advocating for utility pricing that corresponds with California’s climate ambitions
• Investing in photovoltaic panels
• Sourcing green power
• Providing affordable housing through direct capital investment and partnerships
• Conducting scenario planning and creating an interactive GIS map to chart physical risks
• Monitoring national, state, and local laws to stay abreast of regulatory changes
• Preparing to comply with new ESG and climate risk reporting requirements

Supply Chain Management

Responsible Procurement

• Vendor Code of Conduct

Climate-Related Risks & Opportunities

Physical Risks

• Increased storms, wildfires, and drought variations
• Riverine and coastal flood
• Prolonged extreme heat or cold days
• Sea level rise
• Water stress

Transition Risks

• Increased administrative and compliance costs
• Higher energy prices
• Higher insurance costs
• Increased costs for development and renovations
• Changes to renewable incentive programs
• Reduction in value of real estate assets

Opportunities

• Expanding on-site renewable energy capacity
• Developing programs to drive reductions in assets with highest energy usage intensity
• Implementing embodied carbon reduction strategies
• Incorporating climate-related risk and resilience screening within due diligence

Reporting Standards

Frameworks Used: GRI, SASB, TCFD

Certifications: LEED, ENERGY STAR, IREM Certified Sustainable Properties

Third-party Assurance: LRQA (Lloyd’s Register Quality Assurance)

UN Sustainable Development Goals

• 3
• 5
• 6
• 7
• 8
• 10
• 11
• 12
• 13
• 16

See UN SDG Index on page 56 for details

Awards & Recognition

• Newsweek Most Responsible Companies (fourth consecutive year)
• Newsweek World’s Most Trustworthy Companies
• USA Today America’s Climate Leaders
• JUST Capital America’s Most Just Companies
• NMHC Top 50 Managers
• NMHC Top 50 Owners
• Healthiest Employers Finalist (third consecutive year)
• Welcoa Well Workplace Gold Award