Our governance of climate-related risks and opportunities is embedded into our overall corporate governance. As of 2020, climate-related risks are assessed as part of our formal enterprise risk management process. To manage these risks and opportunities, our board has well-defined oversight, and our management team helps to implement the Climate Action Plan, enabling progress towards our climate goals.
Our Board of Directors exercises oversight over climate-related risks and opportunities through our board-level Corporate Social Responsibility & Sustainability (CSR&S) Committee. Rose McKinney James – a global expert in clean energy and MGM Board Director – chairs the CSR&S Committee, which governs our Climate Action Plan.
Our CEO and President Bill Hornbuckle oversees climate-related matters on behalf of management. Bill also acts as a liaison between the CSR&S Committee and senior management.
Two divisions collaborate to lead the implementation of our Climate Action Plan: Social Impact & Sustainability and MGM Resorts Design & Development (MRDD). Our Chief People, Inclusion & Sustainability Officer and President of Design & Development collaborate to champion progress toward interim and longer-term climate goals. They are supported by goal champions and an ESG Taskforce comprised of executives from Strategy, Investor Relations, Risk, Finance, Global Procurement, Human Resources and other functions.
As a framework for our climate strategic approach, MGM Resorts references the Corporate Climate Stewardship Guidelines for Best Practice Climate Action in the Paris Agreement Era. Developed by Carbon Disclosure Project (CDP), World Wildlife Fund (WWF) and The Gold Standard, this framework of four key elements informs our approach.
In 2021 and 2022, we engaged an expert independent third party to conduct a detailed climate risk and opportunity assessment for transition and physical risks. Our assessment considered low, moderate and high carbon price scenarios for policy risk. The high carbon price scenario is in line to limit climate change to 2°C by 2100. The scenarios used for our physical risk exposure include a High Climate Change Scenario (RCP 8.5), Moderate Climate Change Scenario (RCP 4.5), and a Low Climate Change Scenario (RCP 2.6).
Based on a moderate scenario, we assessed 25 of our resorts and entertainment venues for their exposure to climate-related hazards by 2050. We identified two properties with high overall risk exposure, 22 properties with moderate overall risk exposure and one with low overall risk exposure.
Based on our independent assessment, as well as the policy risk which affects our company overall, our primary exposure at the property level is to wildfire, water stress and sea level rise related risks.
The Task Force on Climate-Related Financial Disclosures finds increased pricing of GHG (greenhouse gas) emissions and increased operating costs, such as higher compliance costs, as examples of climate-related policy risk. Our industry-leading approach to renewable energy helps to mitigate policy risk over the medium and long term.
While our portfolio has low exposure to direct damage from wildfire, our Las Vegas resorts and some regional properties are still close to regions of high wildfire risk exacerbated by climate change. This can cause disruptions to travel and give rise to air pollution that may impact guest experience.
As a major operator of resorts, many of which are in the desert destination of Las Vegas, we recognize the criticality of water to our business. We know there is long term water stress in the Southwest United States where much of our business operates. Due to the Southern Nevada region's innovative water infrastructure planning (most of the water used indoors is recycled back to its source), the
region is well-positioned to adapt to potential future water supply constraints. However, we are still extremely focused on water conservation, with a special emphasis on consumptive water use.
Sea Level Rise
A small number of our properties are in areas that may be subject to sea level rise and extreme weather events that may interrupt our operations or the operations of critical suppliers. Damage may occur to these properties, reducing the number of customers who visit our facilities in such areas. Although we maintain both property and business interruption insurance coverage for certain extreme weather conditions, such coverage is subject to deductibles and limits on maximum benefits.
We have two sets of climate-related metrics, goals, and targets. Our primary set focuses on absolute scope 1 and 2 GHG emissions reduction and sourcing renewable electricity by 2030 (2019 baseline), and a secondary set covering intensity reduction for carbon, energy, water, and materials & waste by 2025 (2007 baseline). Both sets rely on underlying additional metrics that drive performance in these areas.
Primary Climate-related Metrics & Goals:
Secondary Climate-related Metrics & Goals (2007 baseline, global):
Find our climate-related targets, performance and progress in our Social Impact & Sustainability Metrics and Goals 2021 disclosure.
Our broader approach to climate metrics illustrates our understanding that climate action goes beyond energy alone, that many climate-related risks manifest as water-related impacts, and all materials have embodied carbon emissions. Multiple initiatives in each of these areas help deliver against a broader decarbonization agenda and help increase our resilience to climate risk. Three key examples include our 100 MW MGM Resorts Mega Solar Array which helps reduce scope 2 emissions; our turf removal program which helps reduce consumptive water use and mitigate our exposure to climate-exacerbated water stress; and our robust Materials & Waste program helps reduce disposal to landfill related scope 3 emissions.