Sustainability

Climate Change Response Strategy

ESR Kendall Square REIT recognizes the importance of the impact that climate change may have on asset value and operations. The Company seeks to transparently disclose its responsible efforts to address climate change to global investors and stakeholders, and accordingly analyzes climate-related risks and opportunities in a structured manner with reference to the internationally recognized TCFD (Task Force on Climate-related Financial Disclosures) framework.

Based on climate scenario analysis, ESR Kendall Square REIT identifies climate-related risks and opportunities at the asset level and manages their potential financial impacts. From a company-wide governance perspective, the Company assesses the implications of climate change and proactively responds to enhance climate resilience. In addition, we continue to manage greenhouse gas emissions and energy consumption on an ongoing basis, and plan to expand the use of renewable energy and establish greenhouse gas reduction targets going forward.

Governance

Establishment of a Climate Response Framework

  • The Company strengthens accountable management centered on management and the Board, with the Board overseeing sustainability strategy and the climate response framework. To enhance the efficiency and expertise of Board operations, the Board has established and operates the Risk Management Committee, Investment Review Committee, and ESG Committee.
  • Key committees, including the ESG Committee, review climate-related risks and opportunities and deliberate on response strategies and implementation plans. Based on the professional expertise of each committee, climate-related risks and opportunities are assessed and corresponding decisions are made.
Climate Response Governance Framework

Strategy

Understanding the Impact of Climate Change on the Business

  • To understand the impact of climate change on the business, the Company conducts multi-dimensional analyses of short- and mid-to long-term risks and opportunities. In particular, a structured process is applied at the early stage of investment to assess potential climate risks of assets and strengthen the identification of risks in advance.
  • For quantitative assessment, climate scenarios are utilized to evaluate asset-level risk exposure and the expected financial impacts. The results of these analyses are directly linked to the core management strategy of ESR Kendall Square REIT, leading to final investment decisions aimed at minimizing potential asset losses from climate change and strengthening portfolio resilience.
Category Type Climate-Related Risk / Opportunity Time Horizon
Short   Medium   Long
Physical
Risk		 Acute Asset value loss and operational disruption due to extreme weather events such as storms and floods              
Chronic Asset value loss and operational disruption due to abnormal temperatures              
Transition
Risk		 Policy &
Regulation		 Increased asset costs due to stricter regulatory responses to climate change              
Market Increased capital expenditure and operating costs driven by tenant demand for low-carbon buildings              
Opportunity Market Additional revenue generation through renewable energy              
Expanded funding opportunities through the growth of sustainable finance products              
Low Medium High

Risk Management

Consideration of Climate Risks in Investment Decision-Making

  • The Company manages a wide range of risks that may arise throughout overall operations and real estate asset management processes. To this end, the Risk Management Committee has been established to oversee climate-related risks.
  • In particular, climate risk assessments are conducted as a mandatory step in investment decisions for new assets. Through this process, climate and natural disaster-related risks associated with each asset are thoroughly reviewed, and the analysis results are reflected in investment decisions to build a stable asset portfolio.
1. Identification of Natural Hazard Risks
  • Identify potential natural hazard factors that may occur in areas surrounding prospective investment assets.
2. Assessment of Climate Change Impacts
  • Conduct risk assessments by natural hazard type and verify the likelihood of disaster occurrence for each asset.
  • Utilize climate scenario analysis and related data (IPCC SSP) from a mid- to long-term perspective.
3. Derivation of Mitigation Measures
  • Review approaches to identify appropriate mitigation measures according to the level of risk associated with each identified natural hazard.

Metrics & Targets

Management of Greenhouse Gas Emissions and Establishment of Reduction Targets

  • To enhance the effectiveness of the climate response strategy, the Company manages greenhouse gas emissions and energy consumption through clearly defined metrics.
  • In addition, the Company pursues specific targets to achieve carbon neutrality, including obtaining LEED certification for environmentally friendly logistics centers and expanding the use of renewable energy through rooftop installations. These efforts demonstrate ESR Kendall Square REIT's proactive response to climate-related challenges.
GHG Reduction Targets






First Listed Korean 
REIT to Publish 
Sustainability 
Report in 
Compliance with 
GRI Standards, 
Third-Party 
Assurance. 

ESR Kendall Square REIT, a logistics-focused REIT, performs socially responsible activities across environmental, social, and governance sectors, and published the ‘2022 Sustainability Report’ for the first time to provide relevant information clearly to stakeholders. We will actively communicate with stakeholders through sustainability report.

  • ESR KendallSquare REIT
    Sustainability Report 2022

    ESR Kendall Square REIT aims to enhance financial performance based on our expertise and stable asset management capabilities in domestic logistics real estate development and investment while achieving sustainable business, a key driver for the future management paradigm.

    Download 2022 Report






Sustainable
Asset Life
Cycle

We are committed to sustainable management by actively incorporating ESG elements throughout the entire lifecycle of our properties, from development, including site selection, design, and construction, to operation. By integrating environmental values at every phase and pursuing management activities that prioritize sustainability, we effectively address ESG risks. Our ultimate objective is to have a positive impact on the environment and stakeholders, fostering long-term collaboration and growth.

Sustainability of asset lifecycle

  • Asset sale
  • Investment analysis and decision-making
    Analyze assets on ESG and minimize risks before investment decision
    • Select sustainable sites
    • ESG due diligence
    • Climate change risk assessment
  • Planning, Design, and Development
    Minimize ESG risks and improve asset performance
    • Acquire certification for new green building:LEED BD + C, etc.
    • Ecological investigation report
    • Evaluate feasibility of installing solar panel
  • Operation and management
    Minimize operation costs, optimize operation, and adopting new technology
    • Guidelines for sustainable operation and maintenance
    • Acquire green building certifications for existing assets:LEED O+M, WELL Health Safety Rating, etc
    • Monitor energy and water consumption, GHG emissions and waste generation
    • Climate change risk assessment
  • Leasing
    Green Lease Contract
    • Include environmental conditions in the lease contract to ask for cooperation on monitoring energy, water, waste, etc.






ESG Highlights

We are dedicated to minimizing our environmental impact through sustainable and efficient asset development and operation. Our strategy includes careful site selection, green design initiatives, biodiversity protection, and the use of carbon-efficient, energy-efficient, and water-efficient products to reduce energy consumption, optimize water usage, manage waste, and minimize carbon emissions.

We proactively assess geological and climate-related hazards to develop strategies addressing climate risks. ESG factors are integrated into our logistics assets, aiming for global green building certifications such as LEED BD+C, LEED O+M, and WELL Health-Safety Rating. Many of our holdings are already certified green buildings, and we aim to increase this number. Our ongoing commitment to responsible water usage, renewable energy integration, and continuous energy conservation ensures our developments are sustainable and resilient, presenting a solid investment opportunity.

  • WELL Health-Safety
    Rating

  • US Green Building Council
    LEED Gold

  • Green Standard For Energy and Environmental Design
    (Excellent - Green Grade 2)

  • Building Energy Efficiency
    Rating Certification (Grade 1)