Air Conditioning Systems Industry ESG Thematic Report, 2023

Environmental, Social and Governance (ESG) in the Air Conditioning Systems Industry

The combination of Environmental, Social, and Governance (ESG) within the investment and decision-making processes directs to responsible investing. Investment into ESG has soared up since 2013; in fact, Air Conditioning Systems Industry can be seen as a powerful tool for achieving certain ESG goals across the globe.

Air Conditioning Systems space have been a crucial sector for investors as it has a major concern both environmental and social aspects. Environmentally responsible product use, usage of toxic chemicals, usage of renewable and/or high energy efficient products, hydro and perfluorocarbon emission, achieving carbon neutrality and/or carbon net zero and affordability of products has been critical elements for selected companies in terms of ESG.  In context of diversity and inclusionmost companies are abiding by equal opportunities for all.

Air conditioning systems have aimed at contributing to energy efficiency through the innovation of invertor A/C, which has been critical in energy saving, longer durability, reduced noise, faster cooling, and no temperature fluctuations. These have helped companies to achieve United Nations’ Sustainable Development Goal 7 (Affordable and Clean Energy). Packaged terminal air conditioners and rooftop ACs has also been integrated with inverter, energy efficient and wireless connectivity which in turn is caused by transition in market demand for customers.

ESG Trends

Air conditioning systems have an impact on ESG through environmental and social pillars. AC’s significantly contribute to emissions, distorting the environment and have a significant impact on UN SDG 13: Climate Action. ACs emit HFC’s and PFC’s which in turn impact ozone layer and causes depletion of the same. However, these have been energy efficient with technological improvisation and can use renewable energy as it is very much needed in the current market. Top companies in this sector are required to abide to norms in achieving Carbon neutrality or Carbon NetZero by 2030 and 2050. As technological advancements like inverter AC, wireless operations, and energy efficient system help achieve energy efficiency, these companies are also in focus to develop clean technologies to improve sustainability of operations. For example, Hitachi has a policy to achieve decarbonized Society by 2030. Considering diversity and inclusion, companies have set targets for achieving equal opportunities for diverse candidates like gender, native, indigenous people etc.

ESG Challenges

Underdeveloped countries especially in Africa, Middle east, or Sahara Desert face significant challenges to afford an air conditioner during peak summers. There are various studies of high mortality rate due to heat stroke and summer heat waves. Even though air conditioning system technology has been rising rapidly in terms of avoiding certain emissions, these are not affordable as they pose significant challenges for underdeveloped communities to purchase given their high price-tag.

In terms of social, these systems can contribute to fluorocarbons to atmosphere which in turn creates damage to environment like ozone layer depletion and causes negative health impacts to communities.

Growth of the Air Conditioning Systems Market

The global air conditioning systems market size has been valued at USD 106.60 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 6.2% from 2021 to 2028. The spread of the COVID-19 pandemic negatively impacted the demand for air conditioners in 2020 owing to decreased consumer spending. Governments of different countries are focusing on efficient air conditioning. For instance, in February 2019, Energy Efficiency Services Limited (EESL), a joint venture of four Public Sector Enterprises under the administrative control of the Ministry of Power, Government of India, announced the launch of the Super-Efficient Air Conditioning program. The program is intended for promoting the use of energy-efficient technologies and bringing about a reduction in energy consumption. From this program, the Ministry of Power in India also aims to address India’s Hydro chloro-fluro carbons Phase-out Management Plan and Cooling Action Plan by 2032.

Key Companies in this theme

    • Daikin Industries, Ltd.

    • Mitsubishi Electric Trane HVAC US LLC

    • Hitachi Ltd

    • Carrier

    • Whirlpool Corporation

    • Haier Group

Scope of the Air Conditioning Systems Industry ESG Thematic Report:

    • Macro-economic and ESG-variable analysis of the industry, including regulatory, policy, and innovation landscape

    • Key insights on infrastructure developments and ESG issues affecting the theme

    • Identify key initiatives and challenges within the industry

    • Identify ESG leaders within the industry

    • Understand key initiatives and the impact of companies within the sector to fuel an informed decision-making process

    • Analysis of industry activities based on multi-media sources, including significant controversies and market sentiment

Key Benefits of the Air Conditioning Systems Industry ESG Thematic Report:

    • Developing a comprehensive understanding of macro-economic, Policies & Regulations and innovations affecting the Air Conditioning Systems Industry, globally

    • Key insights into environmental developments and ESG issues affecting the theme

    • Identifying ESG risks and opportunities to business among leading players in the Market

    • Obtaining a clear and relevant understanding of company actions, progress, and impact and find opportunities for investment into the sector