{"id":13073,"date":"2022-03-01T16:58:41","date_gmt":"2022-03-01T16:58:41","guid":{"rendered":"https:\/\/insulation.org\/io\/?post_type=articles&p=13073"},"modified":"2023-08-14T18:12:17","modified_gmt":"2023-08-14T18:12:17","slug":"state-of-the-industry-a-carbon-message-everyone-should-copy","status":"publish","type":"articles","link":"https:\/\/insulation.org\/io\/articles\/state-of-the-industry-a-carbon-message-everyone-should-copy\/","title":{"rendered":"State of the Industry: A Carbon Message Everyone Should Copy"},"content":{"rendered":"

\"\"<\/a><\/p>\n

At NIA\u2019s 65th Annual Convention last October, association President David J. Cox and Joe Mlachak, National Sales Manager of NIA member Fit Tight Covers, delivered a luncheon presentation on how the mechanical insulation industry is perfectly positioned to help government and industry meet goals for reducing greenhouse gas (GHG) emissions. Their message in \u201cTogether for Tomorrow (As We Make the World a Better Place)\u201d could not have been more timely, as every day brings more news related to the need to reduce CO2 <\/sub>in the atmosphere. In the weeks before publication of this article, for example, Rhodium Group published early data showing a 6.2% rise in GHG emissions last year over 2020.1 <\/sup>As of late January 2022, the United Nation\u2019s Race to Zero campaign reported \u201c1049 cities, 5,227 companies, 1,039 educational institutions, 441 financial institutions and over 3,000 hospitals from 52 healthcare institutions\u201d2 <\/sup>involved in net zero initiatives. Clearly, GHG emissions are a topic of global concern, putting the issue front and center for 2022 and beyond.<\/p>\n

The good news is that this is an area where the mechanical insulation industry can make a huge difference. I spoke with Dave Cox, Joe Mlachak, and Jacob Jordan (a Field Representative and NIA Certified Insulation Energy Appraiser with Fit Tight Covers) to get a picture of how the growing focus on sustainability is creating new opportunities.<\/p>\n

Doing Good Is Good for Business<\/h2>\n

Industry is firmly on board. According to the Alliance of CEO Climate Leaders, one-fifth or more of the largest 2,000 companies worldwide have set goals to reach net-zero targets by 2050.6 <\/sup>Companies like Procter & Gamble, Salesforce, and HP have joined more than 200 other businesses who signed the Climate Pledge, an Amazon-led initiative whose members agree to work to reach the goals of the Paris Agreement 10 years ahead of schedule, including achieving \u201cnet zero annual carbon emissions by 2040.\u201d7 <\/sup>There is strong evidence that doing good is good for business. A Nielsen report published in 2018 indicated that a clear majority of consumers (68% of Americans; 81% of global respondents) believed it \u201cextremely or very important that companies implement programs to improve the environment.\u201d8 <\/sup>The numbers rose as the age of the respondent dropped, with sustainability being a greater factor for Millennials\u2014the consumers and investors of the future\u2014than for members of previous generations.<\/p>\n

Along those lines, shareholders are pushing the companies they invest in to reduce their carbon footprint, and Environmental, Social, and Governance (ESG) ratings can affect everything from a business\u2019 public image to its credit. According to the World Economic Forum, \u201cAnalysis by UN PRI of the world\u2019s 1,000 most valuable companies found that climate-related policy could wipe 43% off the value of the highest-polluting companies and add 33% value to the best performers.\u201d9 <\/sup>Let that estimate sink in and consider the ripple effects, from the financial cost to shareholders and investors through the impacts on suppliers, partners, insurers, end users, and the global economy.<\/p>\n

Dave Cox provided an example of how someone researching a company can get a snapshot of how well it is managing climate-related risks: the MSCI ESG rating. MSCI, Inc. gathers data on 35 ESG \u201cKey Issues,\u201d which vary based on industry and global industry classification standard, using a framework that allows assessment of risks and opportunities.10 <\/sup>Examples of environmental Key Issues (the \u201cE\u201d in \u201cESG\u201d) include carbon emissions, product carbon footprint, financing environmental impact, water stress, toxic emissions and waste, opportunities in green building, and more. MSCI assesses the issues and uses Sustainalytics\u2019 ESG research and risk ratings11 <\/sup>to arrive at an ESG score. Companies are rated using a grading scale much like the one used to rate bonds (see Figure 1).<\/p>\n

\"\"<\/a><\/p>\n

On its website, MSCI is clear about the fact that these ratings serve one purpose only: i.e., to measure resilience to ESG risks relevant to financial well-being. MSCI stresses this is just one of many factors that affect financial risk. That said, would you prefer to invest in (or do business with) a leader or a laggard?<\/p>\n

The market for such ESG information continues to grow. Along with the bandwagon of companies publicly pledging to reach carbon neutrality by a given date, we can expect to see more and more entities releasing information about their ESG efforts. The race is already underway: According to a report by the Governance & Accountability Institute, in 2019, 65% of companies in the Russell 1000 Index published information on their sustainability efforts, including 100% of those in the utilities sector and
\n90 companies in the industrial sector, and 90% of S&P 500 companies produced sustainability reports.12<\/sup><\/p>\n

Regulation and Legislation as Driving Forces<\/h2>\n

Right now, ESG reporting can seem like the Wild West. There are a host of different standards and frameworks to choose from. (You can read \u201cESG and Climate Impact Reporting\u201d by double-clicking on the first image on this web page and scanning the QR code.) Different approaches and tools\u2014coupled with varying interpretations of how to use them\u2014mean that reporting by even the most well-meaning of companies can fail to provide the basis for an \u201capples to apples\u201d comparison, much less an accurate aggregate assessment on the larger state of industry\u2019s efforts. It is also easy for a company to talk a good ball game without actually doing much. This is enough a problem that there is a term for it: greenwashing (said to come from the term \u201cwhitewashing\u201d).13 <\/sup>Greenwashing is when a company makes statements or provides misleading information to make it seem more environmentally conscientious than it actually is. It is often seen in the context of products advertised as being \u201cgreen\u201d without providing any real substantiation or details. Another example involves misdirection: A company that sells home improvement products publicizes its commitment to sustainable practices, encouraging customers to bring certain types of products to its stores to be recycled; yet, at the same time, it makes huge sums of money selling environmentally damaging merchandise.14<\/sup><\/p>\n

As a result, just as Environmental Product Declaration (EPD) and Life Cycle Analysis\/Assessment (LCA) labels can help one identify products that have been vetted for environmental impacts using standardized methods, soon we can expect some level of standardization across sustainability reporting. The Securities and Exchange Commission (SEC) is expected to release a draft of new ESG reporting and climate disclosure requirements in the next few months, which should help level the playing field by setting standards for performance metrics and what data must be gathered, measured, and disclosed by public companies.<\/p>\n

Legislation, too, increasingly plays a role. Dave Cox highlighted an example of particular relevance to the mechanical insulation industry: New York City\u2019s Climate Mobilization Act of 2019, which includes a full slate of laws related to carbon reduction. Among these, Local Law 97 sets carbon-reduction targets for buildings over 25,000 square feet, including those summarized in Figure 2.<\/p>\n

\"\"<\/a><\/p>\n

The writing is on the wall. In the near future, whether motivated by a drive to \u201cdo well by doing good\u201d or because regulations or laws force them to do so (or some combination of both), everyone will in some way be affected by the need to reduce their carbon footprint, which represents a tremendous opportunity for anyone who designs, engineers, manufactures\/supplies products, or provides services related to reducing carbon emissions.<\/p>\n

The Power of Insulation\u2014Save the Planet (while Saving Money)<\/h2>\n

This is where the story of Dave Cox\u2019s truck enters the picture. Cox read the truck\u2019s EPA sticker, which showed that the truck emits 406 grams of carbon per mile. He calculated what his truck emits in a year (using 20,000 miles\/year as a baseline), then used the EPA\u2019s Greenhouse Gas Equivalencies Calculator (https:\/\/www.epa.gov\/energy\/greenhouse-gas-<\/a>
\nequivalencies-calculator) to get comparative values for other strategies for offsetting emissions. Against these figures, he added an estimate of the length of pipe that needed to be insulated to offset his emissions. Figure 3 summarizes the shocking results.<\/p>\n

NIA has made the argument that \u201cInsulation Is Greener than Trees\u201d for more than a decade (see Christopher P. Crall\u2019s January 2009 article and the September\/October 2021 updated version published in this magazine at www.insulation.org\/io\/archives<\/a>).<\/p>\n

Cox connected with NIA member Joe Mlachak, National Sales Manager with Fit Tight Covers, a designer and fabricator of custom removable thermal insulation covers for industrial and commercial mechanical piping and equipment, who described how his company had recently performed an energy appraisal for a customer with \u201cfairly aggressive\u201d sustainability goals. Cox realized Fit Tight Covers\u2019 appraisal and subsequent insulation project with the large, well-known pharmaceutical company is a solid case study in how the insulation industry can work with businesses and organizations seeking to meet carbon-reduction goals. The two men joined forces to explain the concept to others.<\/p>\n

Insulation in Action: An Energy Appraisal Case Study<\/h2>\n

The customer is an international pharmaceutical company whose website details ambitious goals to eliminate GHG emissions from all its operations by the end of 2025 and achieve carbon-negative status by 2030. The company has an aging facility with complex piping systems supporting hot processes not far from Fit Tight Covers\u2019 Midwest headquarters. This combination of factors made the plant a logical candidate to benefit from an energy appraisal.<\/p>\n

The first step was a meeting with local plant personnel to gauge interest and buy-in to the global corporate initiative, and to explain how insulation could help reduce GHG emissions. It was clear from the meeting and subsequent facility walk-through that the customer was committed to taking action to reduce its global footprint and that there were opportunities for insulation to make a real difference.<\/p>\n

Fit Tight Covers has several NIA Certified Insulation Energy Appraisers, including Mlachak and Jake Jordan, who assisted with gathering the data and preparing the report. Jordan identified 2,300 locations of missing and damaged insulation, all of which they cataloged in NAIMA\u2019s 3E Plus\u00ae software. Use of the independent, third-party, industry-standard tool, along with the team members\u2019 insulation energy appraisal certifications, gave the customer confidence in the process and results. As Mlachak notes, \u201cthey didn\u2019t just have to take our word\u2026 It made the whole process more transparent.\u201d<\/p>\n

\"\"<\/a><\/p>\n

Collecting data for all the areas targeted for improvement was a painstaking process. Jordan recalls, \u201c[The customer] said they wanted anything hot covered,\u201d which included all plant steam, condensate, heating and process lines. Jordan entered all the data in 3E\u00a0Plus, along with size measurements for each item, associated energy costs, and process temperatures. They also captured thermal images.<\/p>\n

After the on-site investigation and subsequent work on the computer, the Fit Tight Covers team needed to partner with an insulation contractor to get labor costs for the insulation upgrades. Mlachak estimates the scope of work was about 70\/30: 70% removable insulation and 30% conventional insulation. While his team was responsible for engaging the customer, conducting the appraisal, and manufacturing the blankets recommended in the solution, Mlachak says, \u201cthe contractor was a key piece to this puzzle.\u201d Results of the appraisal are summarized in Table 1.<\/p>\n

\"\"<\/a><\/p>\n

In this case, Jordan explains, given the customer\u2019s ambitious carbon reduction goals, beyond the standard written report describing the appraisal process and providing results (including calculation of heat gain\/loss, return on investment [ROI], payback period, emission reductions, etc.), Jordan prepared a full presentation for the plant personnel as well as corporate engineers and decision makers. As the team presented their findings, Mlachak says \u201cThe CO2 <\/sub>emissions savings was what they were after. You could see each of them having an ah-ha moment when we converted the dollars into emissions.\u201d Figure 4 is an illustration of the \u201cah-ha\u201d-inspiring data.<\/p>\n

\"\"<\/a><\/p>\n

Mlachak notes that the EPA\u2019s GHG Equivalencies Calculator\u2014the same tool Dave Cox used in comparing carbon-reducing strategies to offset his truck\u2019s emissions\u2014helped them paint a clear picture for the customer of the value of the insulation upgrades (see Figure 5).<\/p>\n

\"\"<\/a><\/p>\n

Mlachak says his personal favorite comparison is how the proposed insulation project was equivalent to the carbon sequestered by 4,000 acres of forest<\/em><\/strong>. As with the calculations using 3E Plus, use of a standard, third-party\u2014in this case, U.S. Government\u2014tool added legitimacy to the team\u2019s results. The team also presented the numerous other benefits of the insulation project, including the following.<\/p>\n