One problem area in energy efficiency is with landlord-tenant situations. The tenant is not motivated to cut back on energy because when the company leaves the space they normally cannot take the change they invested in with them (lights, windows, etc.). On the other hand, landlords are also not motivated to reduce energy usage, as either the tenant pays for its own usage anyway (sub-metered) or it just passes on the cost along whether high or low. Neither side is motivated, this is a lost opportunity. On the other hand, leases that are “green” or aligned with tenant energy usage have the potential to motivate both sides to invest and cost-share in energy efficiency projects.

A green lease addresses this problem by providing financial incentives to both the owner and the tenant to better realize the benefits of investing in energy efficiency.

Some advantages of a green lease include:

• Faster savings for the landlord, who can choose to avoid amortization, allowing the landlord to recoup all operational savings resulting from an energy efficiency project.
• Energy-efficiency tenant goals written in the lease, requiring tenants to meet basic sustainability goals, can ensure that these spaces add value to building.
• Installing submeters is a direct way for a landlord to make tenants aware of their actual energy consumption and bill tenants according to actual energy use. Instead of charging on a per square foot basis, but not knowing what they use, now the landlord can know what each tenant uses and have them pay accordingly. This will resolve disagreements before they get out of control.
• Side story: a mall owner used a single electric meter and charged all of their diverse tenants based on square footage. Nobody knew what was used and everyone was wasteful (air conditioning, leaving on lights and plug load, etc.). Then the manager realized that the two restaurants in the mall were likely using much more electricity than the other tenants given the considerable refrigeration needs and long hours. Meanwhile, the little family accounting law, and insurance offices were only open 9 to 5 and only used certain simple equipment (personal computers, lights, printers) and realized this was not fair. He had a comprehensive energy audit done and changed the rules to require the restaurants to pay more for electricity and the offices less due to usage. Eventually, he installed sub-meters.

Another area where green leases will be important is in New York City, involving enforcement of their Local Law 97 bill, which contains greenhouse gas emission limits. Building owners must meet a limit and pay a high fine for exceeding it. The owner must calculate using total energy usage, including from tenants, even though the owner does not control tenant operations. LL 97 goes into effect in 2024, and many building owners face high fines, in part, due to their tenants’ energy usage. In anticipation of problems, many new leases contain clauses which apportion part of any future potential LL 97 fine on particular tenants or limits their usage or hours of operation. It is unknown how effective this will be to get tenants to cut down on energy usage to help the owner comply with the law.

CCES has the experts to help you determine tenant and common area energy usage in a wide variety of building types. CCES cannot provide legal advice on green leases but can provide technical expertise in reviewing and complying with them. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Several studies show not only environmental benefits but also direct financial benefits of “greening” one’s offices, such as having a positive impact on worker productivity. One study showed a 1% increase in sick days costs a business about $2,000 per employee per year. Losing an employee could cost a business even more between finding a replacement, hoping he/she is as good as the one that left, and training.

Here are seven key areas where green features in offices and work places have been shown to improve occupant productivity or health: 

1. Indoor Air Quality. The quality of workplace air is a significant driver of productivity, given the cocophony of compounds that workers are potentially breathing in, between off-gases from carpeting, furniture, walls, and operating equipment. Studies show that improved ventilation can increase productivity by as much as 11%. 

2. Thermal Comfort. Thermal comfort is also crucial to productivity, with performance dropping 4% when the room is too cool and 6% when it’s too warm. An issue of concern is how to get workers with different temperature preferences to agree on a thermostat setting. Studies have also shown that by giving occupants some control over workspace temperature results in a greater willingness to accept a wider temperature range.

3. Windows. Windows are the worst part of the building envelope when it comes to insulation and energy efficiency. On the other hand, studies have found that worker satisfaction increases when they have access to windows. Therefore, it is important to balance out these factors in designing office space.

4.  Plants. Offices that install and maintain plants near workspaces and even views of nature from windows results in higher productivity than depriving workers of a connection to nature. 

5. Noise. Possibly the greatest driver of productivity is noise and acoustics, with studies showing up to a 66% drop in productivity when workers are exposed to various types of distracting background noise. Installing physical design features and providing reminders to building occupants can be effective at reducing background noise in workplaces. In addition, consider window film or additions which better block the noise from outside the workplace, such as traffic.

6. Exercise. This appears quite difficult. How can a company get people to move or exercise when they are doing a job that involves sitting or standing by machines? There are ways. One – for multi-level businesses – is to do away with elevators and require workers to go up and down stairs to meet with each other. Another is to put the kitchenette or other places to meet a certain distance away from worker’s desks, making them do a little more walking to get that coffee. Or have fewer general printers and place them strategically to make workers travel to get their printouts. This is all for the sake of getting people out of their seats and to move a little every day. 

7. Location. What’s the old joke about the three most important factors for a facility is “location, location, location.” Well, that’s true for productivity, too. The presence of convenient amenities such as childcare centers, shops, gyms, and drug stores have an impact on occupant productivity.

CCES has the experts to help your facility maximize your indoor air quality and amenities to improve comfort and productivity. Contact us today at 914-584-6720 or at karell@CCESworld.com.

On March 22, 2022, the Securities and Exchange Commission (SEC) voted to propose rules requiring companies to provide additional climate-related information in their registration statements and annual reports, including in their financial statements. The intention of the new rules would be to provide consistent and reliable information to investors to help them make judgments about the impact of climate risks on current and potential future investments. The proposed amendments are modeled in large part on the recommendations from the Greenhouse Gas Protocol.

The SEC vote provides that the proposed amendments would supplement (rather than replace) the disclosures already required in SEC filings and that companies should thus continue to assess whether disclosure of climate risks is still required per applicable guidance.

The Release sets forth proposed rules dealing with Climate-Related Disclosure, Climate-Related Impacts, Governance, Risk Management, Financial Statement Metrics, GHG Emissions, Attestation of Scope 1 and Scope 2 Emissions Disclosures, and Targets and Goals.

The proposed climate-related disclosures would apply to a registrant with Exchange Act reporting obligations and companies filing a Securities Act or Exchange Act registration statement. These climate-related disclosures and other metrics would be required in appropriate registration statements and Exchange Act annual reports. The proposed rules would also require registrants to disclose any material change to the climate-related disclosure provided in a registration statement or annual report.

The proposed rules would require a registrant to disclose any climate-related risks reasonably likely to have a material impact on the business or financial statements, which may arise over the short and long term. “Climate-related risks” is defined to mean the actual or potential negative impacts of climate-related conditions and events on a registrant’s operations, financial statements or value chains, as a whole. “Value chain” means the upstream and downstream activities related to a registrant’s operations. “Upstream activities” are defined to include activities – even by a third party – that relate to the initial stages of the product (supply chain and fabrication). “Downstream activities” are defined – again, even by a third party – related to the fabrication to make the finished product and its delivery of the good or service to the end user. The entire sequence from supply chain to end of use need be evaluated. Thus, the SEC is defining climate-related risks extend beyond a registrant’s own operations to those of its suppliers and distributors.

The proposed rules would require a registrant to identify the type of climate-related risk (physical or financial), its details (for example, for a physical risk, specifically, what and where it is (i.e., flooding or hurricane zone), and the material (bottomline) risk), and the registrant’s plan to mitigate it.

The proposed SEC rule permits, but does not require a registrant to disclose information about any “climate-related opportunities” it may be considering to pursue.

Please note that this is not a legal interpretation of the proposed SEC rule. If you want more information on it and its impacts on your company, please engage a legal professional with experience in this area. CCES has the technical experts to help your firm identify physical and other risks and opportunities of climate change. Contact us today at karell@CCESworld.com or 914-584-6720.

Although this newsletter emphasizes Climate Change and air pollution, we should not forget that plastic pollution of our oceans and waterways costs us greatly. As of 2021:

• Over 300 million tons of plastic are produced every year for use in a wide variety of applications.
• Over 14 million tons of plastic end up in the ocean every year. Plastics make up 80% of all marine debris found in surface waters and deep-sea sediments.
• Marine animals ingest or are entangled by plastic debris, which causes a huge number of deaths.
• For humans, plastic pollution threatens food safety and quality, health, and tourism. The continual manufacturing of plastic (fossil fuels) contributes to climate change.

Therefore, there is an urgent need to explore new and existing legally binding agreements to address marine plastic pollution. This means developing disincentives and regulation against single-use plastic, such as to tax retailers who sell items packaged in single-use plastic or ban or discourage the manufacturing of goods packaged in it.

The EU implemented a Directive on single-use plastics, which aims to prevent and reduce the impact of certain plastic products on the environment. Single-use plastic products cannot be placed on the markets of EU Member States if sustainable alternatives are available and affordable. This applies to single-use plastic products, such as cotton swabs, cutlery, and straws.

Private enterprise is contributing, too, with over 70 leading businesses and financial institutions calling for a legally binding UN treaty on plastic pollution, presented to the UN Environmental Assembly (UNEA 5.2) on March 2, 2022. A committee has been formed to develop global binding regulations to discourage plastic pollution that:

• Sets a clear direction to align governments and businesses behind a common understanding of the causes of plastic pollution and the danger of such pollution to all societies and a shared approach to address them. Because ocean plastic pollution is a global problem, there should not be a patchwork of rules and solutions, but consistent standards achievable by reasonable practice and cost;
• Includes both upstream and downstream policies, aiming to keep plastics in the economy, where necessary, but out of the environment and reduce virgin plastic production and use; and
• Provides a clear, robust structure to ensure participation and compliance by all.

The goal of the effort is to encourage research and investment to scale innovations and improve implementation in the countries and industries most in need of change.

While CCES does not work in the area of plastic pollution, we can help you in other environmental areas meet and comply with current rules and look for economical ways to be more “green” to impress clients and customers. Contact us today at 914-584-6720 or at karell@CCESworld.com.