ENTOUCH Smart Building Solutions

Separating Fact From Fiction – ESG Management and Facilities Cost Avoidance

The potential assessment of fines and penalties for failure to meet sustainable goals exists within a company’s environmental, social, and governance (ESG) management strategy. According to FacilitiesNet, city, state, and federal statutes and most states and cities have passed energy benchmarking laws. Furthermore, these laws are advancing, and New York City is the latest entity to enact sweeping changes to the fines and penalties associated with failure to meet carbon emission standards, reports Green Tech Media. Facilities managers need to understand how ESG management and facilities cost avoidance go hand-in-hand and why new legislation is changing how companies approach sustainable, proactive facilities management.

The High Cost of Failure to Consider Energy Management in Facilities Cost Avoidance

The exact value placed on failure to meet benchmarking and carbon emissions reductions’ standards vary by the governing body. The fines assessed in one state may not necessarily be the same as other states, and some cities may assess an additional penalty that gives rise to steep penalties for companies that fell to maintain compliance.

For example, New York City’s recent legislation aims to reduce the carbon emissions caused by the city’s most significant buildings, those with more than 25,000 square feet, by 40% by 2030. Even though such buildings only form 2% of the Big Apple’s real estate, they account for more than half of the city’s energy drain. In a sense, the new legislation is the city’s own “Green New Deal,” and it has natural implications for some of the largest companies in the world that operate from the Big Apple. Also, the city has mandated these buildings implement new standards, including the creation and maintenance of periodic energy audits, retrofitting facility assets and lighting and submetering upgrades by 2025, and while these measures have initially been part of another “Greener, Greater Buildings Plan,” they are reiterated within the new legislation.

The Department of Energy also possesses the power to assess civil penalties for failure to comply with the Energy Conservation Standards Program, and these penalties may add up quickly. Civil penalties stand at a maximum of $460 per day, and over the course of a year, such penalties rapidly rise to near $150,000. That’s only for a single model violation, so multiple violations may occur for failure to benchmark energy use, track water use and waste and avoid unnecessary energy loss. Ultimately, the higher energy costs a building has, the higher penalties may be. At the same time, companies that manage to implement an ESG management strategic avoid these penalties and expenses, as well as reap the benefits associated with sustainability initiatives.

What Does ESG Management and Facilities Cost Avoidance Have in Common?

Following the creation of an ESG strategy, companies usually implement new processes and technologies that result in facilities cost avoidance. Accurately, an Energy Star study of 35,000 buildings that have implemented benchmarking standards and new technologies found annual energy savings rose approximately 2.4%, and over three years, most buildings achieved savings of 7%. In addition, the buildings’ average Energy Star rose by six points. This demonstrates how implementing the necessary practices to track energy use makes an organization more conscious concerning its energy use. Furthermore, the information gained from retrofitting and understanding energy use and waste has natural implications for maintenance planning and more.

Know-How New Legislation Affects Facilities Cost Avoidance Strategies Now

No one knows exactly how legislation governing efficiency and emissions standards will evolve in the coming months. Although the “Green New Deal” remains on the table, disagreements within the political circles allude to a future in which it does not pass, at least not under the current administration. More importantly, the “Green New Deal “does focus on increasing the financial penalties associated with failure to implement energy efficiency upgrades and standards. Therefore, it is in the best interest of your company to begin the process of Learn more about the value of ESG management and facilities cost avoidance by visiting ENTOUCH online today.