September 2023 – Sustainability, Resiliency and Risk Mitigation

The American Society of Heating, Refrigeration and Air Conditioning (ASHRAE) approved for publication of its highly anticipated airborne infection risk mitigation standard for buildings. For those not overly into HVAC, ASHRAE is the governing society responsible for developing building design as well as energy efficiency standards and guidelines for building

The new standard that was enacted, ASHRAE Standard 241, Control of Infectious Aerosols, establishes minimum requirements to reduce the risk of disease transmission by exposure to infectious aerosols in new buildings, existing buildings, and major renovations.

Infectious aerosols are tiny, exhaled particles that can carry disease-causing pathogens and are so small that they can remain in the air for long periods of time and be inhaled. As a building’s HVAC system is designed to recirculate and recondition air, the circulation of pathogens via the air is what the standard is focusing on. Use of this standard is designed to reduce exposure to SARS-COV-2 virus, which causes COVID-19, influenza viruses and other pathogens that cause major personal and economic damage every year.

According to ASHRAE, Standard 241 provides requirements for many aspects of air system design, installation, operation, and maintenance.

Important aspects of the new standard include:

Infection Risk Management Mode – Requirements of Standard 241 apply during an infection risk management mode (IRMM) that applies during identified periods of elevated risk of disease transmission. AHJs (Authorities Having Jurisdiction) can determine when the enhanced protections of Standard 241 will be required, but its use can also be at the discretion of the owner/operator at other times, for example, during influenza season. This aspect of Standard 241 introduces the concept of resilience – ability to respond to extreme circumstances outside normal conditions – into the realm of indoor air quality control design and operation.
Requirements for Equivalent Clean Airflow Rate – Other indoor air quality standards, including ASHRAE Standards 62.1, 62.2, specify outdoor airflow rate and filtration requirements to control normal indoor air contaminants. Historically, air flow rates and clean air from the outdoor air was intended to introduce cleaner air from the outside in order to keep the air in the building mixed with outdoor clean air. Standard 241 breaks new ground by setting requirements for equivalent clean airflow rate, the flow rate of pathogen free air flow into occupied areas of a building that would have the same effect as the total of outdoor air, filtration of indoor air, and air disinfection by technologies such as germicidal ultraviolet light. This approach allows the user of the standard flexibility to select combinations of technologies to comply with the standard that best satisfy their economic constraints and energy use goals.
Requirements for Use of Filtration and Air Cleaning Technology – Dilution of indoor air contaminants by ventilation with outdoor air can be an energy intensive and expensive way to control indoor air quality. Standard 241 provides extensive requirements for use of filtration and air cleaning to effectively and safely achieve meet equivalent clean airflow requirements efficiently and cost effectively. These include testing requirements to establish performance and to demonstrate that operation does not degrade indoor air quality in other ways, for example by elevating ozone levels.
Planning and Commissioning – Standard 241 provides assessment and planning requirements culminating in the development of a building readiness plan, a concept carried over from the work of the ASHRAE Epidemic Task Force. It also describes procedures for commissioning systems to determine their installed performance.
“Standard 241 represents a significant step forward in prioritizing indoor air quality,” said 2022-23 ASHRAE President Farooq Mehboob, Fellow ASHRAE. “By implementing the requirements outlined in this standard, we can improve the health, well-being and productivity of building occupants. This standard empowers building owners, operators and professionals to take proactive measures in safeguarding indoor environments. It’s an essential tool for creating healthier indoor environments and promoting sustainable practices.”

The Standard 241 committee will continue and work on improving sections of the standard adding additional requirements, clarifying requirements and developing tools to help the public use the standard. Industry and consumer-friendly resources such as courses, podcasts, factsheets and information events will be introduced in the future.

Green Sprouts. The likely impact to existing and new buildings from this new Standard will require more external air to be brought into the building (i.e., more exterior exchanges of air) or better cleaning of the existing air in the building. Purification of existing air in buildings has not been an area where many building owners have historically focused. The ability to use either or both methods (i.e., more outdoor air intake or purification of the indoor air) to help reduce the spread of disease will surely become the topic of conversation amongst property managers and engineers and will result in return on investment decisions at the property level to determine what works better and what costs more – increasing outdoor airflow and the need to condition that air or purifying that which is already in the building.

Given that COVID-19 is not likely to go away any time soon, Standard 241 which is going to drive technological investments in existing and new buildings and which provides alternative paths to address better air quality in our existing and new building stock should significantly help reduce the spread of disease within the built environment. Tenants should be watching carefully to see how their landlords’ intend to address this key issue and who is paying for it and how.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Joseph West, Sharon Caffrey, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo, Seth Cooley, or the attorney in the firm with whom you are regularly in contact.

Last week, the California legislature passed and, over the weekend (on October 9, 2023) Governor Newsom signed, two climate disclosure bills which focus on the financial risk of greenhouse gas emissions. Full text of the bills can be found at SB 261 and SB 253.

The bills will require that companies doing business in California will be required to state and certify their scope 1, 2 and 3 greenhouse gas emissions and to state and certify their climate related financial risks.

Given that many US companies and many EU and UK companies that do business in the US also transact in California, these laws will have a meaningful impact on many public and non-public companies alike irrespective of the pace or lack thereof from the SEC on its own set of federal climate disclosure obligations.

Bill 261 – Under SB 261, companies with annual revenues of more than $500 Million Dollars that do business in California will now be required to compile and issue a biennial climate-related financial risk report, with the first due date being January 1, 2026.

Bill Text – SB-261 Greenhouse gases: climate-related financial risk. (ca.gov)

“Climate related financial risk” under SB 261 is defined as a “material risk of harm to immediate and long-term financial outcomes due to physical and transaction risks, including but not limited to, risks to corporate operations, provision of goods and services, supply chain, employee health and safety, capital and financial investments, institutional investments, financial standing of loan receipts and borrowers, shareholder value, consumer demand and financial markets and economic health.” Wow, that is a pretty wide ambit of what risks will fall within the definition of climate related financial risks!

SB 261 requires that the reports required under the Bill must be prepared in accordance with the Task Force on Climate Related Financial Disclosures (also referred to as TCFD) reporting framework. Reports that are prepared under the International Financial Reporting Standards -Sustainability Disclosure Standards (or ISSB) will also be acceptable. Failure to report under the Bill will be subject to an annual fine of up to $50,000 per year.

Bill 253 – SB 253, also known as the Climate Corporate Data Accountability Act, applies to companies that do business in California and have total annual revenues in excess of $1 Billion. The reporting requirements will not be applicable until January 2026, once the California Air Resources Board (CARB) has adopted implementing regulations, which must occur by January 1, 2025.
CARB’s implementing regulations will likely provide the key details of the reporting process, including the following:
Bill Text – SB-253 Climate Corporate Data Accountability Act. (ca.gov)

Scope 1 and Scope 2 Emissions. Beginning in January 2026, reporting entities must annually publicly disclose their scope 1 and scope 2 GHG emissions for the prior fiscal year. The bill defines Scope 1 emissions as “all direct greenhouse gas emissions that stem from sources that a reporting entity owns or directly controls, regardless of location, including, but not limited to, fuel combustion activities.” Scope 2 emissions are defined as “indirect greenhouse gas emissions from consumed electricity, steam, heating, or cooling purchased or acquired by a reporting entity, regardless of location.” Most publicly traded companies have begun some level if not a very detailed level of Scope 1 and 2 tracking, with many actually already reporting these metrics.

Scope 3 Emissions. Beginning in 2027, reporting entities will also be required to annually disclose their scope 3 emissions for the prior fiscal year. Scope 3 emissions include “indirect upstream and downstream greenhouse gas emissions, other than scope 2 emissions, from sources that the reporting entity does not own or directly control,” which may include “purchased goods and services, business travel, employee commutes, and process and use of sold products.” Many in the industry are concerned about how they are going to get their supply chain to measure and report in a meaningful way data that will become the reporting entities’ Scope 3 emissions.

Annual Fees. Reporting entities will be required to pay an annual fee to CARB upon filing their annual disclosures. These fees are supposed to be used to fund CARB’s oversight of the program.

Administrative Penalties. Reporting entities that fail to timely file their annual disclosures will be subject to administrative penalties of up to $500,000 per reporting year.

Reporting Standards. Reporting entities must measure and report their GHG emissions in conformance with the Greenhouse Gas Protocol, a set of reporting standards developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBC). Reporting entities must also engage an independent third-party assurance provider to audit their scope 1 and 2 emissions beginning in 2026, and their scope 3 emissions beginning in 2030.

Green Sprouts – SB 253 and SB 261 make California the first state to require GHG emissions and climate risk reporting from large companies. The bills, which are now law, jump the SEC’s proposed climate disclosure rules which have not yet been finalized or released after two publicly disclosed delays in implementation.

Given the number of companies that “do business in California”, irrespective of when and how the SEC makes its climate disclosure rules final and if it does this fall, California has once again cemented its place of relevance in the climate change arena and has mandated movement in this space by larger companies doing business in California. It remains to be seen if other states follow their lead but surely New York, Washington, D.C., Massachusetts and others will take a very hard look at proceeding down this path.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Joseph West, Sharon Caffrey, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo, Seth Cooley, or the attorney in the firm with whom you are regularly in contact.

Month: September 2023

New ASHRAE Standard 241 for Indoor Air Quality – increasing exterior fresh air or purifying existing indoor air!