Dec 5

Impact of ventilation and air conditioning systems on ESG

  • December 5, 2022

Before the Covid-19 pandemic, many companies, including Bulgarian, had built and published corporate social responsibility (CSR). For lot of people, it was an impeccable way to protect their brand reputation and trade mark through acts of kindness and social care. In the last 5-6 years, corporate social responsibility has begun to develop worldwide, emphasising transparency, authenticity and social awareness refracted through the prism of environmental, social and management criteria – ESG (Environmental, Social, Governance). ESG norms have already become an integral part of the way a number of international companies operate, regardless of their size and the industry in which they operate. All these companies conduct their business in buildings using micro-climate maintenance systems (ventilation, heating and air conditioning). Until recently, almost no one looked at ESG assessment and impact through the lens of built and maintained HVAC systems.

What is ESG?

ESG is a term we use to name data and indicators of environmental, social and governance practices described in a non-financial annual report. ESG defines the company’s successful management practices and presents them to all affected parties, such as investors, employees, customers, suppliers, partners, etc. ESG reports present the sustainable development of companies and their attitude to all social, environmental and governance factors.

ESG impact HVAC TANGRAOrigin of ESG

The term ESG was introduced in 2005, covering the integration of environmental, social and governance factors into a company’s processes. ESG covers a wide range of factors that are not part of companies’ financial statements, but are extremely important to all parties, as they are actively involved in governance, climate change, social responsibility and the relationship with partners of companies. For public companies as well as international corporations, ESG is already considered one of the most important parts of the organisation’s strategy. Many international stock exchanges have already introduced ESG as a mandatory requirement for traded corporations.

How can the HVAC sector affect ESG?

A 2010 study by Wigenstad and Grini estimated that in Europe, between 42% and 56% of the total energy consumption in buildings, are heating, air conditioning and ventilation costs. The US Center for Energy Efficiency and Sustainability (CEES) estimates that about 40% of the world’s carbon footprint is from commercial buildings, over 40% of which comes from ventilation and air conditioning systems. For decades now, as businesses move towards a greener future, the concept of environmental, social and governance (ESG) practices has become increasingly popular and in demand. In this regard, HVAC specialists could offer extremely good measures to increase the ESG rating:

  • To support and maintain good air quality (IAQ);
  • To reduce energy costs for ventilation, air conditioning and heating;
  • To reduce the carbon footprint by using better and innovative products and controls;
  • Training on the importance of ESG, IAQ and ultimately the benefits to business and the environment;
  • Shareholders, investors, as well as all suppliers and customers, today look to companies to support along the way in proactive efforts to protect the environment.

One of the biggest ESG practices that businesses can engage in is using energy efficient equipment, as it can not only save  a lot of money for the business in the long term, but also has lower negative impact on the environment. Not to mention it has the added benefit of improved IAQ.

Use of energy efficient ventilation equipment

Indoor air quality (IAQ) is extremely important. Since the Covid-19 pandemic, a great number of companies in Europe have invested funds and efforts in improving fresh air and filtration systems to provide a cleaner and safer environment for their employees. This happened at an extremely small scale and in some companies in Bulgaria. Still, for the majority of investors and building owners, investing in ventilation and air conditioning systems is an unnecessary expense. An upgrade to a fresh air ventilation system built between 2003 and 2008 can reduce heating costs by almost 90%. Here, HVAC engineers and specialists have to make a lot of effort to explain the benefits to the business, to reduce costs and improve indoor air quality.

Use of innovative cooling and heating equipment

Since the start of the war between Russia and Ukraine, heating and cooling costs in a number of public buildings have increased enormously. The prices of energy sources, not only in Bulgaria, but in Europe too, have risen dramatically. HVAC specialists can offer various solutions for renovation of building installations, which will lead to a reduction in heating and cooling costs, but at the same time to a reduction in the carbon footprint of the buildings. In buildings with water installations, old heating boilers can be replaced with heat pump chillers (water cooling/heating units) using new types of Freon, which allow heating with a fluid temperature of up to 70oC at an outside temperature of -10oC. This freon has 682 times lower global warming potential (GWP) than the currently most common R410.

In addition, HVAC engineers and specialists could do a feasibility analysis of various options for system upgrades and replacements (radiator heating, convectors, boilers, heat pump chillers, variable rate VRF/VRV systems, combined heating units and electricity CHP etc.)

Smart devices for management and control of HVAC systems

Shopping centers, public buildings (private, municipal and state), hotels and manufacturing enterprises are the largest consumers of energy in the country. Most of this energy is for heating, air conditioning and ventilation, with HVAC systems consuming at least 40% of the building’s total energy. Optimising each system and its demand-driven control (DCV) are key factors for reduction of energy costs and carbon footprint. Smart thermostats, DCV (Demand Controlled Ventilation) and occupant control sensors, as well as building automation systems (BMS) can significantly decrease ventilation, heating and air conditioning costs. They allow setting temperatures and amount of processed air when you are in the room and thus lowering the costs when you are not in the building.

Demand Controlled Ventilation (DCV) is an intelligent system that uses information from various sensors and sensors to adjust the flow of processed air and its temperature according to your needs. Thus, HVAC systems have a lower energy consumption and, at the same time, a longer life of the components. Additionally, almost all manufacturers currently offer programming via mobile phone, tablet or computer. There is no air conditioning producer which does not provide a remote control application (so-called smart solutions) for new home air conditioners.

Why is ESG important?

Although ESG is becoming increasingly popular and important for investors and international corporations, there are still no uniform evaluation criteria. Different rating agencies offer different criteria and methodologies for calculating ESG. All stakeholders (investors, customers and suppliers, the public, business partners, public organisations, etc.) are paying more and more attention to information about ESG evaluations of companies in their choices. Ventilation and air conditioning systems play an important role in the environmental aspect, as it became clear from the above research. In addition to reduction of the carbon footprint and costs of air conditioning and heating, HVAC systems also help to maintain the workplace safety through better air quality (IAQ). A large part of the social component is how employers treat workers and what kind of working conditions do they provide. HVAC systems and IAQ are of high importance as they provide better comfort, more fresh and filtered air, lower risk of respiratory diseases and allergies, better ventilation of kitchens, toilets and common areas, etc. In our opinion, ESG is about to become the leading criteria in choosing an HVAC system and solution.

More and more international companies turn to TANGRA for equipment selection advice, and before signing a contract we complete an ESG questionnaire together to verify that these products will improve their ratings. Europe’s decarbonisation goes through ESG for all companies, as voted at the end of November in Brussels. Ventilation and air conditioning systems are the fastest and easiest solution to improve the ESG ratings of any company.

TANGRA offers its partners audits and optimisations of HVAC systems

For more than 33 years, TANGRA has been preparing energy surveys and improvement proposals for its customers and partners. Each proposal is supported by a technical and economic analysis, including a payback period for the investments. TANGRA is the first manufacturer of energy-recovery recuperative units in Bulgaria, and is the only one certified by Eurovent. In the proposal to clients, the company’s team always tries to offer products that meet the highest requirements for efficiency and sustainability, thus helping their clients to achieve better and better ESG ratings. For more information and questions, you can contact our team at 0887 73 73 75 or at office@tangra.bg

Sustainable HVAC and ESG NEWSSustainable HVAC and ESG

On Monday 28/11/2022, the Council of the European Union announced the final approval of the Corporate Sustainability Reporting Directive (CSRD). This was the latest major step in revising and expanding the measurement and reporting of corporate responsibility and sustainability in the EU.

With this approval and the expected imminent adoption of the rules by the European Parliament, the legislation is already adopted. The rules will start to apply from the beginning of 2024 for large companies with more than 500 employees, 2025 for companies with more than 250 employees or 40 million euro revenues and since 2026  for all registered SMEs in the EU.

The Corporate Sustainability Reporting Directive (CSRD) was created as an update to the Non-Financial Reporting Directive (NFRD) in 2014. The new rules and scope of the Corporate Sustainability Directive expand the number of companies required to publish and provide transparency on their sustainability. The estimated number of around 12,000 currently is expected to grow to over 50,000 companies that will provide, along with their annual reports and reports on their impact on the environment, human rights, social standards and risks related to their development. The Corporate Sustainability Reporting Directive (CSRD) will require public and transparent disclosure of ESG results under the common framework of the European Sustainability Reporting Standards (ESRS), with the initial set of standards presented earlier in November 2022. The directive and legislative framework will be published in the Official Journal of the European Union after being signed by the presidents of the European Parliament and the Council of Europe, and will officially enter into force 20 days later. Member States will have 18 months to implement the new rules.

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