AvalonBay Communities

Carbon per million dollars of revenue. The legacy industry-standard reference (CDP, MSCI). Useful for cross-sector context, but distorted by margin — high-margin firms appear artificially efficient. Read alongside the operational and asset intensities for the full picture.

OpEx (operating expenditure) is the running cost of the business — staff, services, energy, materials. This shows how carbon-intensive operations are per million dollars of spend. Removes the margin distortion that revenue-based ratios introduce.

EVIC (Enterprise Value Including Cash) is the firm's total capital footprint — equity + debt + cash + minority interest. The EU's standard intensity measure (SFDR PAI 3) — answers: how much carbon does each million of capital deployed in this business produce?

PP&E (Property, Plant & Equipment) plus leased real-estate assets is the firm's physical infrastructure on the balance sheet. This shows the carbon intensity of that physical footprint — uses Scope 1+2+3 for consistency with the other headline intensities. Surfaces stranded-asset risk for asset-heavy firms.

Carbon per million dollars of physical infrastructure — PP&E plus leased real-estate, including upstream and downstream leased emissions (Scope 3 categories 8 + 13). The most complete view of physical-asset carbon intensity, relevant for REITs and infrastructure-heavy firms.

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AvalonBay expanded its solar program to 69 installations representing over 10 MW of capacity in 2024. The company activated its first resident solar project, the first of fifteen planned projects that will provide renewable electricity to residents.

AvalonBay does not currently use carbon removals (DAC, BECCS, offsets) in its inventory. The company explicitly states it has not cancelled any project-based carbon credits in the reporting year. A net-zero feasibility study was commissioned in 2022 to understand what removals or deep decarbonisation would be needed to reach net zero; outputs are expected to inform the post-2023 transition plan. The company anticipates operationalising a net-zero building within 2-5 years.

• Energy efficiency retrofits guided by portfolio decarbonization assessment

  AvalonBay completed a portfolio-scale decarbonization assessment to identify meaningful energy retrofit projects and prioritize sustainability capex investments. This is being integrated into Asset Strategy Reviews so climate considerations are built directly into business decisions.

• Sustainability-linked financing tied to greenhouse gas emission reductions

  AvalonBay's $2.25 billion revolving credit facility contains a sustainability-linked pricing component that provides interest rate margin and commitment fee reductions or increases based on achievement of greenhouse gas emission reduction targets, determined annually. In July 2024, the company maintained reductions of approximately 0.02% to the interest rate margin and 0.005% to the commitment fee by meeting its sustainability targets, creating a direct financial incentive for emissions management.

• Investments in property technology and environmentally focused companies

  AvalonBay invests through taxable REIT subsidiaries in property technology and environmentally focused companies and investment management funds to further its sustainability efforts and learning. As of December 31, 2024, the company had invested $58.1M with $62.5M in remaining equity commitments. These investments provide both financial returns and sustainability insights, with $33.1M in realized and unrealized gains recognized in 2024.

• Energy efficiency upgrades and cogeneration at operating communities

  AvalonBay deploys high-efficiency lighting, water fixtures, cogeneration systems, and solar panels across its operating apartment communities. These investments are treated as capital expenditures that directly reduce utility costs and operating expenses. The company views these as practical sustainability solutions that both reduce environmental impact and generate accretive returns, with NOI-Enhancing Capital Improvements budget of $110M planned for 2025.

• Embodied carbon reduction via Life Cycle Assessments in development

  AvalonBay uses Life Cycle Assessments on new developments to choose construction materials with lower embodied carbon footprints, addressing embodied carbon in new construction (Scope 3 capital goods).

• Building electrification + LEED Gold for new development

  New Sustainable Development Policy requires mid-rise and high-rise buildings to achieve LEED Gold using BD+C Multifamily Mid-Rise v4. Mandatory design requirements for Energy Efficiency, Electrification (primarily electric HVAC & DHW), Embodied Carbon, Renewable Energy, Water Efficiency, Construction Waste, and EV Charging. 69 communities certified, 61 additional pursuing certification.

• Existing portfolio energy efficiency retrofits

  Demand response and smart building data program covers 51 communities, generating $392,000 net annual utility savings in 2023, enabling 2MW reduction in grid stress. 209 smart thermostats installed across 21 communities. Energy audit/recommissioning, unit turn appliance replacement and lighting efficiency requirements identified as key initiatives in decarbonization roadmap to meet 2030 targets.

• Embodied carbon reduction in new construction

  Embodied carbon is second-largest scope 3 category. Adopted policy requiring LCAs covering A1-A3 lifecycle stages for structure, enclosure, and drywall on all new developments. Established 2017 retrospective LCA baseline. Piloting embodied carbon design charettes; testing lower-carbon concrete, sub-flooring, and drywall. Will set project-specific embodied carbon target in 2024. Founding member of mindful MATERIALS Owners' Forum.

• Building electrification pilots and HVAC efficiency upgrades

  AvalonBay is piloting all-electric HVAC and hot water heating in 2 new northeast developments to build engineering knowledge for future gas-equipment replacements. Simultaneously, the company invests in HVAC energy management systems (e.g. $72k at Avalon Clinton South), building envelope air-tightness improvements (aerosolized caulk at Avalon Brighton at $165k), and LED/equipment efficiency upgrades across the portfolio. These measures reduced Scope 1 intensity from 0.9283 to 0.84 tCO2e/sqft between 2017 and 2022 (82% of the SBT achieved).

• Demand response and smart building programme across 51 communities

  AvalonBay operates a data-driven demand response and smart building programme covering 51 communities in NY, MA and CA. In 2022 it generated $475k in net savings from demand response payments, capacity reductions, and energy efficiency measures, and enables a 2 MW reduction in grid stress during peak events. The platform also monitors combined heat and power (CHP) generation and supports battery storage dispatch optimisation. In NYC, a resident-facing GridRewards app enables residential demand response participation.

• CRREM-based asset stranding analysis and building performance standards compliance

  AvalonBay uses the CRREM tool to project stranding dates for all portfolio assets under 1.5°C and 2°C pathways, assessing GAV and GSF at risk. This directly informs capital allocation for decarbonisation retrofits and disposition decisions. A bespoke Climate and Energy Legislation Tracker monitors current and proposed building performance standards (NYC LL97, Seattle BEPS, DC BEPS, Boston BERDO) to triage which assets require capital investment to avoid fines; for NYC LL97 alone estimated 2031-2036 fines are $5M if unmitigated. A cross-functional Emissions Regulations Taskforce was established in 2022.

• Building electrification of heating and hot water

  Piloting all-electric HVAC and hot water in New Jersey at Wayne (garden + midrise), West Windsor and Princeton Shopping Center locations. Plan to revisit HVAC and hot water design standards in 2023 using lessons learned. Acknowledges electrification of existing communities is more challenging.

• Energy efficiency: demand response, smart thermostats, EMaaS

  Demand management generated $475,000 net annual savings in 2022 with 762 kg CO2e reduction; AvalonBay associates enable 2MW reduction in grid stress. Installed 178 new smart thermostats across 17 communities. Piloting Parity HVAC EMaaS at Avalon Clinton South ($41K annual savings, ~2 year payback). Piloting AeroBarrier air sealing at Avalon Brighton.

• Embodied carbon (capital goods) reduction

  Embodied carbon is AvalonBay's second largest scope 3 category (119,084 tCO2e in 2022). Finalizing policy requiring life cycle assessments (LCAs) for all new developments. Retrospectively completing LCAs for 2017 baseline buildings. Joined inaugural mindful MATERIALS Owners' Forum. Piloting prefabricated wall panels at Avalon Governor's Park to reduce material waste. Exploring Mass Timber Construction.

• Building certifications and green design standards

  63 communities have achieved one or more environmental certifications (LEED, ENERGY STAR, NGBS, FITWEL); 30 additional pursuing. AvalonBay has 38 internal green design standards covering solar PV, HVAC, EV charging, lighting/appliance efficiency, landscape design and biking infrastructure. Building Certified and Climate Resiliency Policy requires third-party climate risk assessment across 14 climate risks for all new developments and acquisitions.

• Demand response and smart building operations platform

  AvalonBay operates a smart building platform covering 40 properties (13.5M sq ft) that monitors CHP generation, supports battery dispatch optimisation, smart thermostats, and interval metering. In 2021 demand response generated $275,000 in utility savings and demonstrated >2 MW of grid-stress reduction capability. The platform integrates summer peak demand reductions into renewable energy credit procurement, further supporting the Scope 2 market-based reduction strategy.

• Tenant/resident energy reduction — downstream leased assets (Cat 13, dominant Scope 3)

  Resident energy consumption (Cat 13 downstream leased) represented 201,945 tCO2e in 2021 and is the largest Scope 3 category, targeted under the SBTi 47% intensity reduction goal by 2030. AvalonBay engages residents through education, a Green Label programme showing energy savings in new apartments, and piloting community-scale solar-for-residents projects at 4 communities in California. Demand-response programmes were expanded to residents in New York and scoped for California in 2021.

• Building electrification and HVAC efficiency upgrades

  AvalonBay is pursuing building electrification as a long-term decarbonisation lever, piloting compact heat-pump units designed for existing multifamily buildings through the NYC Retrofit Accelerator. New construction standards mandate solar-readiness and higher HVAC efficiency. Boiler replacements, HVAC upgrades, and insulation improvements were among the 26 energy efficiency projects completed in 2021, collectively delivering 867 tCO2e Scope 1+2 reductions.

• LED lighting retrofit across ~200 communities saving $4.16M/year

  AvalonBay invested $14.8M in LED retrofits across approximately 200 communities, with the program substantially complete by 2021. The completed retrofits save $4.16M and 20.7 million kWh annually, reducing GHG equivalent to removing more than 3,000 cars from the road. LED retrofits are classified as core efficiency capex within the sustainability budget (6.5-year simple ROI threshold) and contribute to the SBTi Scope 1+2 intensity target.

• Onsite solar + battery storage on owned assets

  Onsite solar generation is treated as a primary lever to reduce Scope 1 and 2 emissions. 3.06 MW activated in 2021 across 23 sites, with planned growth to 59 sites/8.6 MW by end of 2022 and Phase 4 adding 6.89 MW. A battery storage system was commissioned in New York using automation to reduce energy costs and emissions during peak demand events.

• Energy efficiency: LED retrofits, smart metering, demand response

  Completed 7 LED retrofit projects in 2021 (197 communities total) saving 31.4 million kWh annually. Demand response and smart building program covers 37 properties generating $225,000 in annual savings plus $633,000 from interval smart metering verified efficiency measures. Launching smart thermostat rollout in common areas to enable centralized control and demand response participation.

• On-site solar generation across portfolio

  Onsite solar is a primary lever to reduce Scope 1 and 2 emissions. Phase 1 solar (8 sites in DC/NJ) complete; Phase 2 (26 California communities) underway; Phase 3 (20 planned). By end of 2022, 55 solar sites with 8.6 MW total, placing AvalonBay just below the top 5 real estate solar users in the US per SEIA data.

• LED lighting retrofits + demand response

  Completed 10 LED projects in 2020 with annual energy savings of 30.6 million kWh and cost savings of $3.8M, payback under 4 years. Demand response and smart-building program covers 40 properties (13.5M sqft), generating $275,000 in annual savings from demand response payments and load reduction, plus $500,000 verified savings from interval smart metering. Plan to retrofit 20+ more communities to LED in 2021.

• Building automation and smart thermostats

  Leveraging IoT platform for streamlined building operations including smart thermostats enabling real-time portfolio command and control of common-area HVAC for significant load reductions. Smart-building platform monitors CHP generation coast-to-coast, supports battery storage dispatch optimization, water efficiency devices and preventative maintenance.

• Water efficiency via weather-based irrigation

  Water Task Force installed 29 weather-based irrigation systems saving $493,950 and 58M gallons annually, with 31-32 more underway in 2020-2021 expected to save additional $337,000 and 43.9M gallons. Stricter construction standards on water-related fixtures.

• Resident-facing renewable electricity and utility reduction

  AvalonBay activated its first resident solar project (first of fifteen planned) to provide renewable electricity to residents, and educated residents on disaster preparedness and ways to reduce utility consumption — addressing downstream leased asset (tenant) emissions.

• Green building standards and sustainability solutions in new development communities

  AvalonBay incorporates sustainability solutions into new development communities, with a focus on deploying practical solutions that reduce environmental impact and operating expenses. The company's development strategy explicitly includes value-enhancing sustainability solutions as one of its five strategic focus areas. New developments are designed to improve energy efficiency and reduce greenhouse gas emissions, with the company noting that regulatory changes requiring improved energy efficiency could increase costs if not proactively addressed.

• EV charging infrastructure + transit-oriented development

  887 Level 2 EV chargers at 80 communities, plus 1,268 EV outlets at 72 communities. Updated EV Charging Standards in 2023 require 5% of new development parking equipped with Level 2 EVSE plus capacity for additional 5%. 112 transit-oriented communities; 4 TODs completed in 2023 with average Walk Score of 83. Car-sharing (ZipCar) at 14 communities.

• Tenant/resident energy reduction (Scope 3 Cat 13)

  Downstream leased assets (resident emissions) is AvalonBay's largest emissions category at 237,063 tCO2e in 2023. Strategy includes green leases on all new residential leases/renewals starting 2023, GridRewards app in NYC (7% of NYC residents participated; reduced 1,590 kWh, generated $19,375), Resident Solar pilots producing electricity to offset entire community load including residents, and in-unit appliance/HVAC/cook stove electrification at end of life.

• Downstream leased assets (tenant energy) decarbonization

  Cat 13 (downstream leased assets) is AvalonBay's largest scope 3 category at 219,143 tCO2e in 2022. Strategy includes green leases in all new residential leases starting 2023, GridRewards app in NY (8% of NY portfolio enrolled, reduced 2,924 kWh in summer 2022), resident engagement on conservation, and pilots like resident solar in California to engage residents in scope 3 reduction.

• Embodied carbon reduction in new construction materials (Scope 3 Cat 1)

  Construction materials (Cat 1) account for 157,507 tCO2e in 2022, the second-largest Scope 3 category. In 2020 AvalonBay identified concrete, steel rebar, and gypsum core drywall as the three highest-embedded-carbon materials. In 2022 two types of low-embodied-carbon concrete were piloted at AVA Arts District and a policy requiring Life Cycle Assessment (LCA) tracking on all new developments was finalised for 2023 rollout. A cross-functional committee engages vendors to source lower-carbon alternatives.

• Tenant/resident energy reduction (Scope 3 Cat 13) via resident solar and community solar

  Tenant energy (Cat 13 downstream leased assets) is AvalonBay's largest Scope 3 category at 219,143 tCO2e in 2022, representing the dominant driver of its Scope 3 SBT. The company engages residents through energy efficiency communications campaigns, pilot resident solar programs in California (offsetting 100% of resident load), community solar pilots in the mid-Atlantic, and expansion of the GridRewards demand response app. The Scope 3 Cat 13 intensity fell from 3.20 to 2.77 tCO2e/sqft between 2017 and 2022.

• Transportation: EV charging + transit-oriented development

  673 smart Level 2 EV charging stations at 72 communities plus 1,145 Level 2 EV charging outlets at 67 communities. Updated 2020 design standards to require Level 2 EV charging at all new developments. 114 transit-oriented development communities. 16 communities with car sharing including Whip EV (minority-owned).

• Embodied carbon in new development (capital goods)

  Embodied carbon — emissions from manufacturing, transport, installation of building materials — is identified as a large driver of Scope 3 and a key component of achieving the approved Scope 3 SBT. Two pilot projects launched in 2021 to track embodied carbon and develop reduction strategies for design, procurement and construction across the future development pipeline. Investing in Energy Impact Partners (EIP) to support decarbonizing concrete and modular building.

• Tenant/resident engagement on Scope 3 emissions

  Resident engagement integrated into emissions reduction plan: GridRewards app launched at NYC properties enables 133 residents to track usage and reduce consumption during high-carbon peaks (1.2 mWh reduction, ~351 kg CO2e avoided across 6 demand response events). Smart thermostats, green labels in 75 communities, and renewable energy options for residents support tenant-driven Scope 3 reductions.

• Embodied carbon reduction in construction supply chain (concrete, rebar, drywall)

  A 2020 analysis identified concrete, steel rebar, and gypsum-core drywall as the top three high-embedded-carbon construction materials. In 2021 AvalonBay piloted embodied carbon tracking (using EC3 tool and ISO 14040/44) on 2 development projects and is engaging key concrete and rebar suppliers on lower-carbon alternatives. Material substitution is planned for 2022-2023 and is one of the three primary tracks for achieving the SBTi Scope 3 target (47% reduction by 2030).

• Transit-oriented & EV-ready development

  113 transit-oriented developments completed (3 added in 2021) with average Walk Score of 81. 718 EV charging stations installed at 76 communities. Design standards updated in 2020 to require Level 2 EV charging at all new developments (minimum 5% of spaces if no code requirement). EV Task Force evaluating retrofit strategy across the portfolio.

• Embodied carbon reduction in construction materials

  As one of three components of the Science-Based Targets execution plan, AvalonBay is undertaking an in-depth review of embedded carbon in construction materials. This addresses capital-goods (cat 2) emissions for new development.

• Resident engagement on renewable energy for apartments

  Third pillar of SBT plan is engagement with residents on renewable energy procurement for their apartment homes. Piloting residential demand response and carbon emissions tracking in NY and CA via GridRewards app, enabling residents to track and lower utility usage and carbon footprint hourly.