Our Environmental Responsibility Commitment

We work with our clients to promote environmental responsibility at the properties we own. We remain committed to sustainable business practices in our day-to-day activities by encouraging a culture of environmental responsibility at our headquarters and within our communities.

Climate-related Risks

Extreme weather-related events and regulations have long been identified as potential risks to our business. Risks are reviewed and discussed at the highest levels during our annual enterprise risk management process and discussed with the Board of Directors at various points throughout the year. As such, we work diligently to institute ways in which we can limit risk exposure and increase long-term resilience of our assets.

We hold the protection of our assets, communities, and the environment in high regard. Based on our business model, the properties in our portfolio are primarily net leased to our clients, and each client is generally responsible for maintaining the buildings, including utilities management and the implementation of environmentally sustainable practices at each location.

Task Force on Climate-related Financial Disclosures (TCFD)

Throughout the year, as part of the Enterprise Risk Management (ERM) program, management and the Board of Directors jointly discuss major risks that face our business. The company’s risk management approach as it relates to climate-related risks is integrated in the ERM program. In 2020, we embarked on a journey to more closely align our risk identification process to TCFD recommendations. Internal working documents are prepared to proactively track certain risks associated with potential casualty events such as hurricanes, tornadoes, floods, and other severe weather events, while also considering ways in which to explore opportunities for change. This information will be used in the development of our inaugural Sustainability Report as well as submissions to other external reporting frameworks, such as CDP and GRESB.

Our goal is to include risks and opportunities relating to sustainability identified by our workforce as part of our enterprise level risk assessment process. Our Associate Vice President of Sustainability and General Counsel will review these risks and opportunities with our Nominating Corporate Governance Committee of the Board of Directors. Through this vetting process, ideas are shared with the Board of Directors for further consideration and possible response. In 2019, we focused on advancing our sustainability agenda, including creating a sustainability department, which reports to the EVP, General Counsel, and the Board of Directors. Our Board committees get involved in ESG matters as it relates to their specific Committee function. For example, employee engagement is a focus of the Compensation Committee.

Realty Income identifies, analyzes and manages potential environmental and social risks during its acquisition due diligence process and throughout the term of its leases with a focus on increasing the return on investment. As a result, it is envisioned that our stewardship will facilitate a property acquisition and asset management approach that meets the needs of an ever-changing marketplace, produces long-term value creation and distinguishes us as sector leaders.

Pursuing Opportunities

Starting with our headquarters, we’re instituting data tracking systems to identify and deploy activities that will assist in our efforts toward resource conservation, and assist our focus on reducing our greenhouse gas emissions footprint. Each year we increase the depth and breadth of data we track within our portfolio. In working with partners, we are able to assess building characteristics and develop a baseline for which to begin making low-carbon investments and investigating other capital improvements, such as smart controls and efficiency retrofits, that would enable a more sustainable economy. Though a lot has been accomplished in recent years, we realize more is needed. Therefore, we intend to expand our client engagement to achieve shared sustainability objectives efforts on an ongoing basis by:

  • Expanding and incorporating a greater volume of “Green Lease Clauses” to our client agreements for access to utility and performance data through lease rollovers, sale-leaseback transactions, and initiatives which allow clients to identify and implement energy efficiency projects.
  • Scaling collaborative client engagement projects, like those implemented in 2019, to develop solar installations or electric vehicle charging stations on site.
  • Working with strategic real estate partners to survey existing site-level environmental characteristics that can lead to a more comprehensive inventory of the portfolio’s low-footprint initiatives.
  • Continuing to sync up utility data to our automated data management system.
  • Providing our asset management and real estate operations team with additional resources to identify and evaluate client partnership opportunities on the ground.
  • Continuing to strengthen our governance structure and legal instruments to expedite opportunities across our portfolio.

In an effort to take a more proactive approach upstream in our value chain, our development team is taking steps to brief external development partners on our standards and expectations, while accommodating greener options for our clients in their projects. It’s our hope that by more actively educating and engaging with our stakeholders, working more closely with key partners, and pursuing options with our clients, we will start to see an increase in green building certifications and asset value for all involved.

2019 Accomplishments

  • Established a Sustainability Department and Director to head up the program
  • Integrated utility data from GSA properties to expand the scope of data within the data management system we onboarded in 2018
  • Established property acquisition process expansion to collect important environmental efficiency characteristics and green building certifications
  • Partnered with clients to implement solar and EV charging installations
  • Added “Green Lease” clause to lease templates to enable us to acquire utility data
  • Our Green Team engaged in several community volunteer events focused on environmental impact
  • Increased employee engagement with a quarterly newsletter and additional educational events hosted throughout the year
  • Audited breakroom and restroom supplies to substitute with recyclable, biodegradable or FSC-sourced materials
  • Reduced single-use disposables at HQ