HVAC Equipment Industry ESG Thematic Report, 2023

HVAC Equipment Industry ESG Thematic Report, 2023

Compliance, ESG Challenges & Framework, ESG Trends

  • Published Date: Nov, 2022
  • Report ID: Astra-100240
  • Format: Electronic (PDF)
  • Number of Pages: 64

Environmental, Social and Governance (ESG) in HVAC Equipment Industry

Incorporating ESG into decision making and business strategies contributes to an effective due diligence and a better investment decision. The companies which fall under HVAC equipment theme have been reporting their ESG strategies and updates.

HVAC equipment space has been a vital sector for investors as it has a major concern both environmental and social aspects. Responsible sourcing and environmentally responsible product use, usage of toxic chemicals, usage of renewable and/or high energy efficient products, minimizing carbon footprint, achieving carbon neutrality and/or carbon net zero are the most critical environmental factors that companies in this market have focused on. In addition to that, affordability of products and impacts within the supply chain have been the key social impacts concerning consumers and stakeholders. All these factors have a significant impact on attaining the United Nations Sustainable Development Goals (UN SDGs) for companies operating in this sector. 

The pandemic has left a negative impact on this segment where supply chain shortages have increased. Leading companies in the HVAC equipment industry continue to strongly focus on energy efficiency to reduce Greenhouse Gas (GHGs) emissions.

ESG Trends

The HVAC segment has both environmental as well as social impact where the stakeholders are concerned about. In line with responsible sourcingand environmentally responsible product use, companies in this sector have a conflict of minerals policy as semiconductors require minerals which could be rare, there can be discrepancies and disputes arising in the value chain. These influence UN SDG 8: Decent Work and Economic Growth. This will also help companies maintain sustainable sourcing policy. Along with this, responsible product use has been an end user policy which assures better product usage and reduced emissions. Companies report their greenhouse gas emission in terms of Tco2e as per ISO 14064 standard and GHG protocol, along with specific targets to minimize GHG emission by 2030 and possibly attain carbon neutrality thereby contributing positively to attain SDG 13: Climate Action.

The companies are now focusing on renewable energy as well as energy efficiency throughout their operations which can help achieve UN SDG 7: Affordable and Clean Energy. In fact, frameworks such as IEA and ASHRAE have been crucially signifying ESG principles since this segment has a significant impact on the environment.  In terms of the affordability of HVAC equipment, the average price of replacing an HVAC equipment is US$7,000 which is a heavy price tag that can significantly decrease access to underserved communities. This factor negatively affects companies from attaining UN SDG 10: Reduced Inequalities in terms of affording HVAC equipment whilst replacement.

ESG Challenges

There are various challenges for this segment, starting off with frameworks put forward by ASHRAE and IEA, to achieve the specification, the company must have sound revenue and support. The companies mentioned or focused here are leading entities in this segment however pandemic influence on supply chain, production and market had caused a significant impact on business and revenue growth. The HVAC equipment industry is significantly facing affordability issues throughout the consumer end. It can be reduced if the government is planning some subsidies for organizations or residential households which are certified as green. Moreover, companies must focus on making a sustainable and   sound supply chain in order to ensure better market growth and revenue.  

Growth of the HVAC Equipment Market

The HVAC equipment market has been introducing innovative and sustainable procedures to reduce its impact on the environment. Moreover, this segment has been an interest in stakeholder end due to current transition and how companies are addressing their transition to reduced environmental impact and well-furnished sustainability policies. 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 in our country. Global HVAC systems have a value of 136.3 billion USD in 2021 and might expand to a CAGR of 6.3% to 2030.

Key Companies in this theme

    • Carrier Corporation

    • Daikin Industries, Ltd.

    • Emerson Electric Co.

    • Hitachi Ltd.

    • Johnson Controls International plc
    • Lennox International, Inc.

    • Trane Technologies

Scope of the HVAC Equipment 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 HVAC Equipment Industry ESG Thematic Report

    • Developing a comprehensive understanding of macro-economic, Policies & Regulations and innovations affecting the HVAC equipment space, globally

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

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

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

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