Sustainability has become a byword for enterprises in a variety of vertical industries. But its meaning is multi-faceted. In one sense, sustainability applies to managing costs and thereby contributing to the creation of an economically sustainable business model. In another, corporate sustainability refers to the creation of long-term stakeholder value by implementing strategies that focus on ethical, social, environmental, cultural, and economic dimension of doing business. In both areas, HVAC optimization has much to contribute.
Sustainable HVAC is hands-on HVAC
HVAC optimization is a key contributor to sustainability initiatives. Why? Well, allow us to explain.
Let’s start from a key principle: it makes little sense to invest in a product, technology, system, or for that matter anything else and then allow the investment to perform sub-optimally. Yet when an HVAC system is installed and then left, more or less, to its own devices, that’s what happens. And it does happen. Often. Because setting the controls to “comfortable” with minimal further intervention and launching the ship without detailed investigation into how it could be optimized to deliver more (benefits), often for less (cost), isn’t the route to sustainability, financially or environmentally.
The laissez-faire, or hands-off approach to HVAC system management is one whose time may finally be coming to an end. One piece of evidence that’s the case comes in the form of ESG, the abbreviation standing for Environmental, Social, and corporate governance which, in turn, quantifies the degree to which a corporation works on behalf of social goals rather than solely maximizing profits, on behalf of share- and stakeholders. If you’re not familiar with ESG yet, you likely will be soon.
ESG can be understood as synonymous with corporate responsibility and that’s a topic both companies and investors are becoming more attuned to as sustainability issues increasingly gain mindshare with the general public. What ESG takes into account is how companies perform in respect of:
- Environmental issues such as carbon emissions, air and water pollution, deforestation, green energy initiatives, etc.
- Social issues such as employee gender and diversity, data security, fair labor practices, etc.
- Governance issues such as political contributions, executive pay, internal corruption, etc.
Particularly in the first of those categories, it’s clear that HVAC optimization has a significant role to play.
Where the money is going
But there’s more to why should companies care about ESG. The second reason lies in attracting investment, since ESG-led investing is becoming increasingly prevalent and, in fact, has become a metric to judge not only the degree of social responsibility of an investment but also the likely financial return. According to the US SIF Foundation’s 2020 trends report, U.S. assets under management using ESG strategies grew to $17.1 trillion at the beginning of 2020. That’s a 42% increase from $12 trillion at the beginning of 2018.
And that’s the case for a reason: there’s growing evidence that ESG-led investing may result in returns that at a minimum keep pace with the market and also reduce risk. Research by the Morgan Stanley Institute for Sustainable Investing compared the performance of sustainable versus traditional funds and found that from 2004 to 2018, the total returns of sustainable mutual and exchange-traded funds were similar to those of traditional funds. Morgan Stanley also found that sustainable funds consistently showed a lower downside risk than traditional funds, regardless of asset class.
The point that emerges here is that there’s more than superficial greenwashing at stake when sustainability performance is taken into account; to attract investment, addressing sustainability issues matters.
Optimizing for sustainability
And, of course, there are all the traditional good reasons to take HVAC optimization seriously, (whether sustainability-led or not). In the case of sustainability, the benefits are measurable. Furthermore, talking about sustainability is one thing; HVAC optimization plays a role in producing and measuring against the KPIs required to support the claim.
Let’s take an example. What parameters come into play when the goal is a more sustainable building? Think in terms of a triangle of considerations whose three points are:
- Energy efficiency
- Air quality
Sustainability is achieved when the tensions between the three competing goals are brought into balance, for example when stringent energy efficiency goals can be met while maintaining air quality and without compromising comfort. That can only be achieved through HVAC system optimization, such as to identify where HVAC performance can be improved by improving emission, particle deposits, and occupant safety.
For sustainability, act now
The over-riding point here is that building managers increasingly face little choice but to address the question of HVAC optimization in the context of sustainability head-on, whether they’re already doing so to accrue more traditional cost benefits or not. And remember, sustainability is not only a question that isn’t going to go away; on the contrary, it’s an issue that’s going to become even more important to address in future.
It will always remain true that a poorly maintained HVAC system uses more energy than necessary to achieve the same comfort settings as an efficiently running system. It will remain the case that thousands of dollars each year that could be used to drive the business forward are unnecessarily spent on energy in a system that isn’t optimized. And it will remain the case that reduced downtime, extended equipment life, improved indoor environmental quality, and simplified system operation are all good reasons to optimize HVAC systems.
But sustainability is adding another driver to the mix and with investment suitability now coming into play, possibly soon the most pressing driver of all.
At NexRev, we’ve been unlocking the power in facility and energy management data with over half a million connected devices across North America. Our team of experts are focused on helping you deliver more with your budgets, infrastructure, and assets to create sustainable savings in operations and energy, reducing your risk and increasing operational confidence.
To start the conversation about how we can help you to meet sustainability goals, reduce energy consumption, and slow down energy waste, please send a message to: firstname.lastname@example.org