Simon Sustainability Report 2020-2021

IDENTIFIED CLIMATE-RELATED RISKS & OPPORTUNITIES

Category

Time Horizon Identified Risks & Opportunities

Business Impacts & Responses

Policy & Regulation Short-Term

Potential and emerging regulations resulting from climate considerations may limit Simon’s development capacity at certain locations (e.g. water, energy, or land use/zoning restrictions) and may impact Simon’s business and regular operating mechanisms. Changes in laws promoting more sustainable land-use practices due to climate change may also cause delays in development projects and increase costs. We seek opportunities to participate in programs and adopt technologies that may facilitate a transition to a lower carbon footprint and reduce energy-related operating costs. As tenants’ preferences shift towards renewable energy sources, there is an increased expectation that landlords will offer renewable energy sources to tenants. An unsuccessful investment in climate-positive technologies and renewable energy sourcing may put us at a financial disadvantage. Current and emerging regulation on climate-related issues brings legal risks related to monitoring, compliance, fines, and potential reputational damage. Asset level development activities pose risks related to land, air, or water contamination. Growing investor preference to engage with companies that incorporate climate risk into investment decisions and tenant preferences for properties that incorporate climate change mitigation into design and development. Lack of response to stakeholder preferences and failure to comply with regulations could create a reputational risk and potentially a competitive disadvantage to attract and retain tenants. With over 200 locations in 37 U.S. states, our operations are subject to extreme weather events, which can result in property loss and disrupt the ability of staff and tenants to work and customers to shop. Both may increase operational costs and reduce lease income. Longer-term shifts in climate patterns are likely to increase average temperatures that can impact the energy requirements of our properties.

We create awareness for the design and construction team to put procedures in place to prioritize sustainable design and ensure centers are designed to meet regulatory expectations and respond to climatic conditions by employing passive and active design principles. We publicly disclose to GRESB and CDP and publish our annual sustainability report, showcasing our leadership position in energy management, and approach to risk management and climate resiliency. We promote adoptions of building certifications, such as LEED, that promote energy efficiency. We have established property-level targets for energy efficiency, water, and recycling rates, which support capital allocation for low-carbon technologies. We conduct ongoing assessments of energy efficiency and renewable projects across our portfolio, both at corporate and shopping center locations.

Technology

Short-Term

Legal

Short-Term

We conduct thorough environmental studies as part of the due diligence process prior to commencing development or redevelopment to mitigate potential legal risks.

Market/Reputation Medium-Term

We have been increasing our engagement strategy with general contractors and maintenance companies to ensure we have the right partners that can help prepare us for managing climate-related risks and opportunities at our sites. We engage our top 10 tenants regarding sustainability topics to identify opportunities to engage and manage reputation risks.

Operations

Short Medium Long-Term

Extreme weather events can have a financial impact like increased operational costs or lost revenues due to business interruption. We have adjusted our strategy related to physical risks to include business continuity plans and ongoing training for our employees on emergency preparation and safety in the case of extreme weather events.

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