Environmental, social, and governance (ESG) compliance has become a crucial issue for companies in New York City. With the growing awareness of climate change and the impact of businesses on the environment, local lawmakers have implemented regulations to ensure that companies meet certain standards to promote sustainability and reduce carbon emissions.
One of the most significant regulations for ESG compliance in New York City is Local Law 97 (LL 97). Passed in 2019 as part of the Climate Mobilization Act aimed at reducing greenhouse gas emissions, this law requires most buildings over 25,000 square feet to meet strict carbon emissions limits or face significant fines. LL 97 aims to reduce carbon emissions 40 percent by 2030, with 2005 as the base year. The carbon emissions limits will be gradually reduced over time, meaning that companies must take action to meet these requirements every year.
LL 97 is set to take effect in 2024, giving companies a limited amount of time to prepare and ensure that they are in compliance. This includes investing in energy-efficient systems, upgrading equipment and ensuring that their buildings are properly insulated. Failure to comply with the law could result in fines of up to $268 per metric ton of carbon emissions that exceed the limits and other penalties for either not reporting or for submitting false information. Buildings will be required to submit an annual Greenhouse Gas Emission Reports in order to be in compliance. As per LL 97, this must be certified by a registered design professional.
While LL 97 is a crucial step forward for ESG compliance in New York City, it is not the only regulation that companies need to be aware of. The city has implemented a number of other laws and regulations aimed at promoting sustainability and reducing carbon emissions.
Local Law 33 requires large buildings to publicly disclose their energy efficiency ratings, helping to increase transparency and encourage companies to make changes to improve their ratings. Local Law 88 mandates the installation of energy-efficient lighting in commercial buildings, further promoting sustainability and reducing energy consumption.
In addition to these regulations, New York City has also implemented the NYC Carbon Challenge, a program aimed at reducing greenhouse gas emissions from buildings throughout the city. The program encourages companies to set carbon reduction goals and offers resources and support to help them achieve those goals.
The importance of ESG compliance in New York City cannot be overstated. Companies that fail to prioritize sustainability and take proactive steps to reduce their carbon footprint risk falling behind their competitors and facing significant financial penalties. Moreover, being seen as a responsible corporate citizen is increasingly important to customers, investors and other stakeholders, and companies that fail to meet ESG standards risk damaging their reputation and losing business.
To remain competitive in New York City, companies must prioritize ESG compliance. This means not only meeting the requirements of current regulations but also staying up to date with new regulations and taking proactive steps to reduce their carbon footprint. This includes investing in renewable energy sources, implementing energy-efficient systems and reducing waste and emissions wherever possible.
By prioritizing ESG compliance, companies can not only reduce their impact on the environment but also improve their reputation, attract new customers and increase their bottom line. Whereas in some cases, building owners can achieve compliance by changing the way they currently operate in small ways, in many cases larger and more costly changes will need to be made to building systems to meet the criteria. Now is the time for building owners to consider whether they will be able to meet the standards and focus on making any necessary changes before the laws become applicable. Moreover, by taking action to reduce their carbon footprint, companies can help to promote sustainability and set an example for others to follow, making a positive impact on the environment and the community as a whole.
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