ENVIRONMENTAL, SOCIAL, GOVERNANCE
Sentinel believes that environmental, social responsibility and corporate governance (ESG) factors can have an impact on investment performance and must be considered when evaluating real estate investment opportunities and managing real estate assets.
Sentinel's ESG policy is designed to:
- ensure ESG considerations are incorporated into our decision-making processes;
- provide our employees with guidelines for implementing ESG initiatives at our investment properties;
- define Sentinel’ s position on ESG for the benefit of clients, stakeholders and third parties we work with.
This policy applies to all Sentinel entities, employees and affiliates.
Our ESG objectives are integrated into all aspects of our real estate operations and the investment cycle as a whole. These factors are considered throughout our due-diligence, acquisition, construction and development, operations, management and disposition processes.
Our Asset and Property Management teams and the Capital Programs and Sustainability Group regularly evaluate and report property level ESG performance to the ESG Committee, which is charged with formulating our ESG strategy and direction. The Portfolio Management teams, and ultimately the Executive Committee, ensure that this strategy aligns with our clients’ real estate investment objectives and their ESG goals.
2022 HIGHLIGHTS AND ACHIEVEMENTS
Set Long Term Reduction Targets
Sentinel's Executive Committee, in cooperation with the ESG Committee, has established a long-term reduction target of 5% over the next five years, or approximately 1.0% per year reduction in energy and water usage.
In addition, Sentinel supports the goal of the Paris Climate Accords to achieve net-zero greenhouse gas emissions by 2050 or sooner. We recognize the responsibility of all real estate investment managers to positively impact the environments in which we invest. We believe that opportunities exist for thoughtful, targeted sustainable investment within the context of each of Sentinel’s existing investment strategies that both can enhance the economic returns of our properties and meaningfully reduce our carbon footprint. We have decided to focus our efforts on reducing Scope 1 and Scope 2 emissions from landlord-controlled common areas at our communities, with a provisional goal of reducing carbon emissions by 50% over the next ten years.
Analyzing and Improving Performance
During the year, we worked with our third-party ESG consultant to develop a customized reporting dashboard that will allow us to analyze portfolio wide consumption and costs, benchmark properties against one another and track progress towards our long-term targets.
Alignment with IREM
We aligned our Sentinel Green Program, our approach to day-to-day operations, unit interior renovation programs and community-wide value enhancement initiatives, with the basic principles of the Institute of Real Estate Management.
Integrating Efficiency Measures
Waste Management and Diversion
As of year-end 2022, 69 properties in the overall Sentinel portfolio were being tracked by Waste Management. The annual diversion rate portfolio wide is 20%, or 1,892 total tons of waste.
Electric Vehicle (EV) Charging Stations
Sentinel has been evaluating the feasibility of introducing EV charging stations throughout its portfolio and exploring the various legal structures available for such an implementation. In 2022, we completed a market penetration analysis to better understand current electric vehicle charger usage in the geographic areas in which our apartment communities and commercial assets are located. This analysis includes a review of costs associated with each option relative to its use. Through year-end 2022, we have deployed 96 EV charging stations.
Sustainable Capital Programs
All capital programs at Sentinel now contemplate sustainability with regard to both the sourcing of materials and the ultimate impact the project will have on its environment. Specifically, we have ongoing programs for the following improvements:
- retrofitting common area and unit interior lighting with LED bulbs;
- installing recyclable carpet and wood-style vinyl plank flooring;
- converting HVAC systems from R-22 condensers to "cleaner" R-410A condensers;
- installing low flow shower heads, water efficient toilets and drip irrigation systems to reduce water usage;
- installing energy efficient appliances;
- utilizing sustainable procurement processes to source environmentally-friendly products; and
- implementing paperless operations throughout the portfolios.
Since the end of 2020, Sentinel has been working to evaluate the feasibility of introducing solar panels at its properties and the various legal structures available for such an implementation. Ultimately, we entered into contracts for the construction of solar panels at three properties in California. The necessary engineering work commenced during the fourth quarter of 2021, and we are proud to report the completion of the on-site solar array at Foothills at Old Town Apartments in Temecula. The system includes 108 solar panels, which are mounted on the clubhouse roof. The total electrical consumption for the clubhouse is estimated to be 65,546 kwh. These panels will generate up to 63,840 kwh, which will cover 97% of the total clubhouse electric usage. Since going on-line in November 2022 (through April 2023), the solar panels have generated 20,950 kwh of power, saving 32,485 lbs. of CO2, which is the equivalent of planting 245 trees.
We are moving forward with two additional solar projects that will be completed in 2023. The solar panels at Hills of Valencia Apartments in Santa Clarita will be ground mounted on the side of a hill at the rear of the property. This array comprises 230 solar panels, which are expected to generate between 129,538 kwh and 156,743 kwh, covering between 78% and 94% of the property’s common area electric usage.
The solar panels at Antelope Ridge Apartments in Menifee will comprise 347 panels, in a combination of ground mounted panels and panels on the carport roofs. Together, the panels are expected to generate between 193,000 kwh and 238,000 kwh, which will cover between 79% and 97% of the property’s common area electric usage.
Obtaining Recognition through Certifications
Sentinel's overall portfolio contains 36 properties with property-level building certifications, including 22 properties that we have certified under the IREM CSP program. In 2022, in SREF alone, ten additional properties obtained IREM CSP certifications. This brought the total certifications to 61% of the current portfolio. In 2023, another three Fund properties are scheduled to obtain certification, which will bring the total to 25 of the Fund's current 36 properties or 69% of the portfolio. Nona Park Village Apartments in Orlando, the first Sentinel property to receive IREM CSP certification in 2020, was highlighted as a case study in IREM's ESG in Action publication.
Establishing Pathways to Carbon Neutrality
In 2022, Sentinel's flagship development in Australia, The Elements by Kinleaf, achieved carbon neutral re-certification by maintaining numerous sustainable operations throughout the past year, targeting enhanced water and energy conservation, reducing greenhouse gas emissions and utilizing Australian-based carbon credits. Key sustainability features include electric car charging stations, energy efficient appliances, a 30kW photovoltaic system for common area energy use and an 8-star NatHERS rating. Specialty waste streams, access to a centralized geothermal system, a rainwater and grey-water recycling system, occupancy sensors and an embedded metering network also support the building’s high sustainability standards. Our goal is for our entire development portfolio in Australia to meet this carbon neutral standard. In the role of developer, the opportunities to manage sustainable outcomes are much more ingrained in the structure of the development itself, as environmental approaches can be applied in a progressive, holistic way – from building strategies aimed at water and energy conservation to reduction in greenhouse gas emissions and minimal maintenance and waste through the use of durable products.