Essex Property Trust, Inc.: Report on Sustainable Water Management Practices
WHEREAS: The link between climate change, loss of life and property in the drought-stricken West, and water management is a significant policy issue;
Our company derives 84% of its net operating income from California;[1]
A high proportion of its properties are located in areas of high baseline water stress;[2]
Proper management of sustainability issues, including water, is likely to increase the value of real estate assets, regardless of contractual agreements that determine the share of water costs borne between asset owners and tenants. Real estate owners may be exposed to water-related regulations even when water costs are the responsibility of occupants;
In a recent survey of U.S. property owners and investment managers, 76 percent of respondents stated that there is a value difference between a sustainable and non-sustainable property. Moreover, respondents ranked water conservation second, behind only energy efficiency, in a list of 14 sustainability factors that have an impact on the perceived value of an asset;[3]
The Sustainability Accounting Standards Board (SASB) has established industry-specific standards that assist companies in disclosing financially material, decision-useful sustainability information to investors. SASB’s Real Estate Industry Standards include water management disclosure, such as:
Percentage of total property square footage for which water withdrawal data are available, including regions with high or extremely high baseline water stress.
Any water management targets, and an analysis of performance against those targets.
Description of short-term and long-term strategy or plans to mitigate water management risks;
Our company recognizes climate change as a risk factor in annual filings, stating, “‘green’ building codes may seek to reduce emissions through the imposition of standards for design, construction materials, water and energy usage and efficiency and waste management. The imposition of such requirements in the future could increase the costs of maintaining or improving our existing properties or developing properties…resulting in adverse impacts to our operating results.” (emphasis added);
Our company on its website recognizes that water conservation increases shareholder value, stating, “We aim to improve the efficiency of our properties…and focus our efforts on energy conservation, water conservation, and waste management programs. These initiatives help to lower operating costs, improve resident experiences, and increase value for shareholders while decreasing our impact on the environment…To conserve water, Essex has upgraded landscaping to drought tolerant and native species in conjunction with installing rain sensors, matched precipitation nozzles, and drip irrigation. We have also installed low flow showers and toilets.”
Yet, Essex discloses no metrics regarding water usage in its properties. Thus, shareholders cannot properly determine the risks that water poses to our company’s sustainable growth.
BE IT RESOLVED: Shareholders request that the Board of Directors issue a sustainability report to shareholders in consideration of the SASB Real Estate standard by 180 days after the 2019 Annual Meeting, at reasonable expense and excluding confidential information, summarizing the company’s strategies and practices to mitigate risks, stemming from climate change, to the availability of adequate water resources.
[1] Essex Property Trust 2017 Annual Report
[2] https://water.globalforestwatch.org/map/
[3] http://www.cushmanwakefield.com/~/media/global-reports/Sustainability-Survey-Results-Nov2013.pdf
Resolution Details
Company: Essex Property Trust, Inc.
Lead Filer:
As You Sow
Year: 2019
Filing Date:
November 2019
Initiative(s): Materiality
Status: Agreement Reached; Resolution Withdrawn