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ESG and Healthy Buildings: The Role of IAQ Monitoring

Joe Di Noto

The twin disasters of climate change and the COVID-19 Pandemic have underscored a peculiar tension at the heart of the discussion around indoor air quality (IAQ). On one hand, we need our HVAC systems to work harder than ever before to ensure spaces are properly ventilated. On the other, we need our buildings to be more energy efficient if we aren’t going to accelerate global warming past the point of no return. 

Meanwhile, consumers and investors are increasingly aware of the environmental, social, and governmental (ESG) impacts of the products they buy and the companies that produce them. Social media has given these consumers a voice and they are using it. Smart companies are consequently prioritizing ESG concerns as a matter of survival.

So how do we find the balance? This article will explore solutions for using IAQ technology to optimize HVAC systems so that they are both effective and energy-efficient – allowing you to meet the ESG expectations of your investors by preserving both the planet and the health of your staff.

What Is ESG and Why It Should Matter To You

ESG describes the environmental, social, and governance concerns that have increasingly come to define business and investment practice. These include issues like carbon footprints, respecting workers’ rights, and responsible business management. Consumer support for all of the above has led to a virtuous cycle, where investors put their money in ethical businesses, which grow and lead to more ethical investment in the same companies.

Companies that ignore these concerns are likely to pay a hefty price. A recent study found that “high ESG controversy” events led to businesses underperforming their competitors on the stock market by 12% over two years. Further research by Bank of America reports that 24 ESG controversies have lost large US companies a total of $534bn over the past five years, averaging at $22bn per controversy. Meanwhile, CNBC reports that the ESG investment industry sits at $30tn today and is expected to grow by $20tn in the next two decades. These are very practical reasons to make some ethical changes to your business strategy.

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How ESG Relates to Healthy Buildings

Since the places where we work are the key arena where employee rights are upheld or infringed on, building health has become a key social issue for ESG. However, the environmental impact of buildings is enormous - the average US commercial building is 53 years old, and uses huge amounts of gas and electricity - so we must weigh efforts to promote these rights against their carbon footprints. Failure to strike the correct balance can be identified as a failure of corporate governance by investors who increasingly expect full disclosure of the ESG performance data of the companies in their portfolios. 

As both the largest energy expenditure of commercial buildings, and a key determiner of employee health and wellbeing, HVAC is the central battleground on which these opposing forces meet. Getting this area right will provide you with a superb way to show your ESG compliance to investors and clients. Let’s take a closer look at what each of the main ESG areas means for your HVAC system. 

Environmental Concerns

It’s mildly ironic that air conditioners heat the earth as they cool the air, and this can lead us to underestimate HVAC’s impact on the climate. However, the figures leave us in no doubt: Research has shown that buildings are responsible for 40% of global energy consumption, and that buildings use 40% of their energy on HVAC. This implies that roughly 16% of global energy use is HVAC related. Another concerning study found that air cooling was responsible for 20% of electricity use in buildings globally. 

The US government has recently acknowledged the huge sustainability challenge that energy-inefficient buildings pose, issuing the Inflation Reduction Act, which provides massive tax breaks to companies who make energy-efficient upgrades to their premises. Many of the largest incentives are for HVAC-related improvements, such as heat pumps, reflecting the huge amounts of energy that inefficient HVAC systems use. 

The environmental part of ESG comes first for a reason. ESG reports are also known as sustainability reports, and yours will be expected to include sustainability goals. Given that HVAC is likely to be your biggest energy expenditure, it’s a great place to start.

Social Concerns

The ‘S’ in ESG relates to how a company manages its workforce, its interactions with society at large, labor, and politics. A company mistreating employees or causing societal harm can be seen as an ESG risk.

Social concerns arise when indoor air quality and surrounding areas like thermal comfort, lighting, and noise levels are not being properly addressed. This can increase the risk of Sick Building Syndrome and associated occupant ailments.

Failing to fix issues with indoor air quality might be seen as a breach of a company's social responsibility - both in terms of preventing the transmission of diseases such as COVID-19, as well as the direct harms related to poor indoor air quality. Many of these risks were acknowledged in the recent White House Summit on Improving Indoor Air Quality.

HVAC systems, which are often the main culprits in energy consumption, also provide important benefits in this regard: they heat, cool, and ventilate to provide an acceptable social setting for employees and other occupants.   Old or improperly maintained HVAC systems might fail to ventilate a space to an adequate degree, or to do so in an energy-inefficient way.

The risk that this poses, especially to older or physically compromised staff is huge. Studies show that these people experience fear and anxiety about catching COVID-19, and feel increasingly frustrated with their employers. Along with an ethical failure, this situation produces workers lacking in motivation and productivity. 

Governance Concerns

When businesses fail to address how the ‘E’ and ‘S’ of ESG relate to their facilities, governance concerns can crop up. New legislation is constantly being produced that aims both to regulate energy efficiency in buildings and secure safe working conditions for employees. If an aging HVAC system means that your building is too energy-inefficient, or conditions unsafe, you may actually be breaking the law.

Failure to deliver on these terms will be seen as a failure of corporate governance by ESG-conscious investors. Your shareholders will expect ESG reports, and if you can’t provide proof of your commitment to the environmental and social dimensions of your workplace, you might as well say goodbye to them. These investors will have understood that something was amiss in the corporate department as well.

IAQ Monitoring: Balancing ESG and HVAC

So how can we balance HVAC with the environmental, social and governance concerns of ESG? The best way to start is by gaining insights into how your HVAC system is performing and making the appropriate changes from there. IAQ monitoring is by far the most effective way to gain these insights, and can be used to easily improve social and environmental workplace conditions, which will prove that corporate governance is doing its job.

Social Benefits of IAQ Monitoring

The main function of IAQ monitors is to make our air transparent. If you think it already is, then you’re forgetting that indoor air is an ecosystem, supporting viruses and bacteria, like COVID-19, Legionella, and Influenza, and containing varying amounts of volatile organic compounds (VOCs), particulate matter, and CO2. The wrong balance here can have disastrous consequences for health. 

The importance of air is not lost on employees. One recent study showed that 61% of employees would feel safer with improved workplace air quality, while another study confirmed their fears, showing that poor air quality inhibits worker cognition and productivity. 

IAQ monitoring provides a solution by providing a real-time picture of the quality of your air. This allows you to detect where and when parameters are reaching unsafe levels and act in time, preventing crises of ESG and employee health.

Well-placed monitors will also let you locate inefficiencies in your HVAC system, allowing you to make precise improvements that will keep air circulating safely. This strategy will help to prevent employee infection by airborne viruses, and may drastically reduce sick days in the long-term.

Finally, the most effective IAQ monitors feature a built-in dashboard or display screen connectivity option that will allow you to showcase the high quality of your air to your staff. This will help to put their minds and those of investors at ease, proving your commitment to the social aspect of ESG.

Environmental Benefits of IAQ Monitoring

As we’ve seen, a robust HVAC is both highly necessary and potentially very costly for the environment and your pocket. Again, IAQ monitoring provides the solution. The insights gained through IAQ analysis can save you huge amounts of energy and capital, allowing you to deliver on both the social and environmental side of your next ESG report.

Monitors placed around the workspace will allow you to vary your heating and ventilation approach depending on an area’s needs, allowing you to avoid the huge costs of a one-size-fits-all approach.

Building automation systems (BAS) take this strategy to the next level by allowing your monitors to turn the dial automatically based on the parameters in the room. Using this technology, your monitors can reduce HVAC output in a room when low CO2 levels signal that the space is unoccupied. These advanced systems can provide huge energy savings in the long term and are a fantastic way of demonstrating your commitment to ESG. 

Putting Your Money Where Your Morals Are

The contradiction that HVAC poses, between the need for a high-powered system that delivers the cleanest air, and the need to be as energy-efficient as possible, demands action. As we’ve seen, a large part of the solution lies in IAQ monitoring. 

Using insights generated from air quality data, you can streamline your HVAC system to tackle the social and environmental concerns of ESG. The monitors that you install will also help to qualify your premises for building standards, further proving your dedication to ESG. Having implemented these strategies, you can rest easy in the knowledge that you’re satisfying both your investors and your conscience.