Sheila Rafferty-Wiggins – Environmental, Social and Governance (ESG)

September 24, 2023 by Brad A. Molotsky

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

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.

August 10, 2023 by Brad A. Molotsky

Seattle – Not Just for Starbucks These Days – Mayor Proposes Greenhouse Gas Reduction Legislation

Seattle Mayor Bruce Harrell recently proposed legislation that would require the city’s large commercial and multifamily buildings to reduce greenhouse gas emissions (“GhG”) over the next several decades and achieve net-zero emissions by 2050.

Per the City’s press release, the standards were nearly 2 years in the making, are expected to reduce annual commercial building greenhouse gas emissions by 27% compared with 2008 levels,

According to the EPA and multiple studies, the built environment (i.e., buildings) are a large contributor to GhG emissions nationwide, and in Seattle, contributes more than 33% of the city’s total GhG emissions.

Seattle is one of a growing list of cities (including Boston who announced this policy 2 weeks ago) — and more recently, some states (e.g., Washington) — that require many new buildings to be all-electric. While these policies will likely reduce consumption of fossil fuels in many cases, they do not address existing buildings that use gas, oil and fossil fuels to provide heat, hot water and chiller water.

During 2023, more and more states and municipalities are developing building performance standards that aim to reduce buildings’ carbon footprint by requiring them to meet certain standards. These more recent standards focus on greenhouse gas emissions rather than just energy usage.

Seattle’s proposed new standard is, per Construction Dive, the product of nearly 2 years of meetings, open houses, webinars, advisory group and specialized task force sessions. Not surprisingly, not all constituents were happy with pushback during the development of these standards coming from environmental groups that want more and faster emission reductions and from real estate and business groups that believe that standards are far too reaching.

All told, according to the Seattle Office of Sustainability and Environment, the new standards will cover approximately 4,100 buildings in Seattle, including about 1,885 multifamily buildings and 1,650 nonresidential buildings that are mostly downtown and in dense neighborhoods. Like many of the other cities adopting these type of GhG emissions based standards (see, e.g., New York City with Local Law 97), the proposal offers several pathways for buildings to comply with the standards; owners who do not comply would be fined.

It is believe by the City Administration that the new standard will help Seattle secure federal funding and incentives. Seattle City Council is expected to review and likely implement the legislation in their fall session.

Parting Shot – Seattle is part of a growing list of cities and States that are looking to reduce energy consumption in its building stock by way of focusing on fossil fuel consumption and GhG emissions by requiring monitoring, measuring and reporting by larger buildings, and, if standards set by the applicable governing body have been exceeded, the owner of the building (and thereafter, likely the tenants under their leases) will be subject to a fine until they correct their exceedance. Carrots have been offered in the past as incentives, these types of ordinances are much more of the stick approach.

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, 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.

April 27, 2023 by Brad A. Molotsky

Plastic Bag Bans – Do They Work?

According to an article in the Philadelphia Inquirer per a report issued by the City of Philadelphia (the “City”), the City’s 2019 plastic bag ban has resulted in a significant reduction in the use of plastic bags – i.e., the equivalent of filling Philadelphia City Hall with plastic bags every 8 months which would be approximately 200 Million less plastic bags. The City’s report – “Evaluating the Ban: Philadelphia’s Plastic Bag Ban and Changes in Bag Usage in the City” (the “Report”) focused on 2021 to 2022, was conducted by the University of Pittsburgh and Swarthmore College and, concluded that the ban significantly reduced plastic bag use in the City.

Click on this link for a copy of the Report. extension://elhekieabhbkpmcefcoobjddigjcaadp/https://www.phila.gov/media/20230426164234/PlasticBagBanReport-1.pdf#:~:text=We%20used%20a%20difference-in-difference%20approach%20to%20estimate%20the,clear%20boundary%20between%20the%20regulated%20and%20unregulated%20areas.

The City’s ban was passed by City Council in 2019 and took effect on July 1, 2021. It prohibits retailer from providing single use plastic bags and paper bags not made of at least 40% recycled material.

Per the Inquirer, 16 other municipalities in Pennsylvania have some sort of plastic bag ban, including Cheltenham, Radnor, Haverford, Media and Pittsburgh. Cheltenham’s ordinance was recently adopted earlier this week and regulates single use plastic bags, including restaurants’ use of such bags.

The Report concluded that in each category improvement was shown in both the City and the suburbs by way of reusable bag use and reduction of plastic bag use (i.e., proportion using any plastic bag (down), proportion using any paper bag (up) , proportion using any recycled bag (up), proportion using no bag (up), number of plastic bags used per customer (down), number of paper bags used per customer (up) and number of reusable bags used per customer (up)).

As hoped for, the ban resulted in a 53% reduction in the likelihood of a consumer using a plastic bag.

Across the bridge in New Jersey, the State enacted the Single Use Waste Reduction Act in May, 2022 which banned plastic bags and foam food containers and built off of an earlier plastic straw ban which went into effect in 2021. Bags in NJ used to wrap uncooked meat, fish or poultry; bags used to package loose items; and bags used to carry live animals are all exempt from the ban. Residents continue to be frustrated, per recent polling, with the inclusion of a ban on paper bags which are not permitted to be handed out or sold at big box stores and grocery stores larger than 2,500 feet in size. The NJ ban also includes carry out and to go styrofoam cups, plates and to go containers .

Take Aways – it appears pretty clear that behavior can be changed via regulation and that the ban on the use of single use plastic bags and similar products is, in fact, reducing the among of these bags in the waste stream and in common usage without a real negative effect other than some convenience by consumers. Like many things these days, not all municipalities or States will pursue this avenue as a means to reduce dependence on plastics which tend to find their way into our water ways and waste streams, but those that do pass such bans are seeing a marked decrease in the use of these products.

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 or if you have any questions about this post, please contact Brad A. Molotsky, David Amerikaner, 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.

April 3, 2023April 3, 2023 by Rebecca Green

ESG and the Growing Interplay with Class Action Lawsuits

The plaintiffs’ class action bar is exceedingly innovative and in constant pursuit of “the next big then” insofar as potential liability is concerned for acts and omissions of Corporate America. Environmental, Social, and Governance – known as “ESG” – each of the verticals within ESG are surely are topics on the mind of leading plaintiffs’ class action litigators. As ESG-related issues evolve and become increasingly more important to corporate stakeholders, class action litigation against companies is inevitable and has already begun to take shape. This blog post reviews the current landscape of litigation risks, and underscores how good corporate compliance programs and corporate citizenship are prerequisites to minimizing risk.

The Class Action Context:

In 2022, the plaintiffs’ class action bar filed, litigated, and settled class actions at a breathtaking pace. The aggregate totals of the top ten class action settlements – in areas as diverse as mass torts, consumer fraud, antitrust, civil rights, securities fraud, privacy, and employment-related claims – reached the highest historical totals in the history of American jurisprudence. Class actions and government enforcement litigation spiked to over $63 billion in settlement totals. As analyzed in our Duane Morris Class Action Review https://blogs.duanemorris.com/classactiondefense/2023/01/04/it-is-here-the-duane-morris-class-action-review-2023/, the totals included $50.32 billion for products liability and mass tort, $8.5 billion for consumer fraud, $3.7 billion for antitrust, $3.25 billion for securities fraud, and $1.3 billion for civil rights.

As “success begets success’ in this litigation space, the plaintiffs’ bar is loaded for bear in 2023, and focused on areas of opportunity for litigation targets. ESG-related areas are a prime area of risk.

The ESG Context

Corporate ESG programs is in a state of constant evolution. Early iterations were heavily focused on corporate social responsibility (or “CSR”), with companies sponsoring initiatives that were intended to benefit their communities. They entailed things like employee volunteering, youth training, and charitable contributions as well as internal programs like recycling and employee affinity groups. These efforts were not particularly controversial.

In recent years, ESG programs have become more extensive and more deeply integrated with companies’ core business strategies, including strategies for avoiding risks, such as those presented by employment discrimination claims, the impacts of climate change, supply chain accountability, and cybersecurity and privacy. Companies and studies have increasingly framed ESG programs as contributing to shareholder value.

As ESG programs become larger and more integrated into a company’s business, so do the risks of attracting attention from regulators and private litigants.

And The Lawsuits Begin From All Quarters:

While class action litigation can emanate from many sources, four areas in particular are of importance in the ESG space.

Shareholders: Lawsuits by shareholders regarding ESG matters are accelerating. Examples include claims that their stock holdings have lost value as a result of false disclosures about issues like sexual harassment allegations involving key executives, cybersecurity incidents, or environmental disasters. Even absent a stock drop, some shareholders have brought successful derivative suits focused on ESG issues. Of recent note, employees of corporations incorporated in Delaware who serve in officer roles may be sued for breach of the duty of oversight in the particular area over which they have responsibility, including oversight over workplace harassment policies. In its ruling https://blogs.duanemorris.com/classactiondefense/2023/01/30/delaware-says-corporate-officers-are-now-subject-to-a-duty-of-oversight-in-the-workplace-harassment-context/ in In Re McDonald’s Corp. Stockholder Derivative Litigation, No. 2021-CV-324 (Del. Ch. Jan. 25, 2023), the Delaware Court of Chancery determined that like directors, officers are subject to oversight claims. The ruling expands the scope of the rule established in the case of In Re Caremark International Inc. Derivative Litigation, 698 A.2d 959 (Del. Ch. 1996), which recognized the duty of oversight for directors. The decision will likely result in a flurry of litigation activity by the plaintiffs’ bar, as new cases will be filed alleging that officers in corporations who were responsible for overseeing human resource functions can be held liable for failing to properly oversee investigations of workplace misconduct such as sexual harassment.

Vendors and Business Partners: As companies face increasing demands to address ESG issues in their operations and throughout their supply chains, ESG requirements in commercial contracts are increasing in prevalence. Requirements imposed on vendors, suppliers, and partners – to ensure their operations do not introduce ESG risks (e.g., by using forced or child labor or employing unsustainable environmental practices) are becoming regular staples in a commercial context. In addition, as more companies report greenhouse gas emissions – and may soon be required by the SEC to report on them – they increasingly require companies in their supply chain to provide information about their own emissions. Furthermore, if the SEC’s proposed cybersecurity disclosure rules are enacted, companies also may require increased reporting regarding cybersecurity from vendors and others. These actions – and disclosures – provide fodder for “greenwashing” claims, where consumers claim that company statements about environmental or social aspects of their products are false and misleading. The theories in these class actions are expanding by encompassing allegations involving product statements as well as a company’s general statements about its commitment to sustainability.

State Consumer Protection and Employment Laws: The patchwork quilt of state laws create myriad causes of action for alleged false advertising and other misleading marketing statements. The plaintiffs’ bar also has invoked statutes like the Trafficking Victims Protection Reauthorization Act to bring claims against companies for alleged failures to stop alleged human rights violations in their supply chains. These claims typically allege that the existence of company policies and programs aimed at helping end human rights violations are themselves a basis for liability. In making human capital management disclosures a part of ESG efforts (including whether to disclose numeric metrics or targets based on race or gender), companies may find themselves in a difficult place with respect to potential liability stemming from stated commitments to diversity and inclusion. On the one hand, companies that fail to achieve numeric targets they articulate (e.g., a certain percent or increase in diversity among management) may subject themselves to claims of having overpromised when discussing their future plans. Conversely, employers that achieve such targets may face “reverse discrimination” claims alleging that they abandoned race-based or gender-neutral employment practices to hit numbers set forth in their public statements.

Government Enforcement Litigation: Federal, state and local government regulators have taken multiple actions against companies based on their alleged contributions to climate change or alleged illegal activities. For instance, in 2019, the U.S. Department of Justice investigated auto companies for possible antitrust violations for agreeing with California to adopt emissions standards more restrictive than those established by federal law. While the investigation did not reveal wrongdoing, it underscores the creativity that proponents and opponents of ESG efforts can employ.

Implications For Corporate America:

The creation, content, and implementation of ESG programs carries increasing litigation risks for corporations but it is unlikely that ESG progams will diminish is size or scale in the coming years given increased focus by Fortune 100s and 500s and increased regulation at the federal and state levels.

Sound planning, comprehensive legal compliance, and systematic auditing of ESG programs should be a key focus and process of all entities beginning or continuing their ESG journey. As more and more companies adopt some level of corporative ESG strategy planning, compliance and auditing are some of the key imperatives in this new world of exposure to diminish and limit one’s exposure.

Duane Morris has an active Class Action Team to help organizations respond to the ever increasing need to be proactive to these types of risks. For more information or if you have any questions about this post, please contact Gerald (Jerry) L. Maatman, Jennifer Riley or the attorney in the firm whom you are regularly in contact with. We also have 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 or if you have any questions about this post, please contact Brad A. Molotsky, David Amerikaner, 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.

September 8, 2022 by Brad A. Molotsky

ESG – NJBPU issues Order requiring Energy and Water reporting for all Buildings over 25,000 SF

In September, 2022, the New Jersey Board of Public Utilities (NJBPU) issued an order requiring the owner or operator of every commercial building over 25,000 square feet in the state to benchmark their energy and water use as part of an effort to spur energy efficiency.

Building owners must use the U.S. Environmental Protection Agency’s online Portfolio Manager Tool to measure and analyze their respective facilities’ energy and water usage. NJBPU’s website has information about how to report benchmarking. The first benchmarking submissions are due on Oct. 1, 2023, for energy and water consumed in 2022. Portfolio Manager is a FREE tool from the EPA that enables owners to input data and measure and monitor consumption.

“This is the next important step in implementing a best in class, statewide, energy efficiency program which will help us achieve Governor Murphy’s goal of 100% clean energy by 2050,” said NJBPU President Joseph L. Fiordaliso. “Creating a system of benchmarking allows us to measure the use of energy (electricity and gas) and water by the state’s biggest buildings and support building owners in reducing energy and water usage and operating costs.”

Benchmarking is intended to help commercial building owners and operators measure and analyze their respective facilities’ energy and water usage and compare it to other similar buildings. Building owners and operators can use this information to make informed decisions about taking advantage of financial incentives for energy efficiency improvements.

The NJBPU initiative is directed by the New Jersey’s Energy Master Plan, which calls for transparent benchmarking and energy labeling. The program it intended to enable building owners to obtain aggregated, building-level energy and water data from their utility companies through a data access service. The Board will also establish a “help desk” to assist building owners as they measure and analyze their respective buildings’ energy and water performance.

This program will also protect individual ratepayers’ energy and water use information by requiring utilities to securely provide aggregated, building-level data. Building owners are required to obtain their tenants’ affirmative, written consent for the utilities from which they receive services to provide building-level energy and water data to the building owner in certain situations to protect individual energy and water use information.

Consent will be required only when there are fewer than four tenants in a building or if one tenant exceeds 50% of the energy or water consumption.

More information about building benchmarking through NJBPU is available at https://njcleanenergy.com/commercial-industrial/programs/energy-benchmarking.

Food For Thought – NJ through the NJBPU Order joins California and Washington state as well as over 42 cities and 2 counties in requiring some form of energy and water disclosure mandate. While many do not like being forced to report which is understandable, having this mandate will enable the State and tenants to better access which buildings are more efficient than others when it comes to energy and water consumption that are often paid for by common area charges assessed to these tenants. If and to the extent the SEC’s proposed rules on climate disclosure become effective, having a tool that allows for measurement and verification of various data sets will help bolster various companies ability to measure, verify and report on such data in the energy, water, waste, recycling, materials and air quality space.

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. We would be happy to discussion your proposed project and how these new rules might apply to you. For more information or if you have any questions about this post, please contact Sheila Rafferty-Wiggins, Brad A. Molotsky, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo, Seth Cooley, David Amerikaner or the attorney in the firm with whom you in regular contact or the attorney in the firm with whom you are regularly in contact.