Name: How to Prepare for Upcoming Climate Regulation
Uploaded: 2025-03-13T19:06:04.373Z
Duration: 47 min 20 s
Description: How to Prepare for Upcoming Climate Regulation

Transcript for "How to Prepare for Upcoming Climate Regulation": Hello, and welcome to our webinar today on how to prepare for upcoming climate regulation. Today, we recognize that leading edge states and local governments are shifting to mandatory disclosure of greenhouse gas emissions, climate risk, and building performance. I am pleased as ever to have my friends Sarah and Bill from Lifetime joining us for this illuminating discussion. My name is Catherine. I am the director of carbon advising at NGINpact, where our aim is to positively impact the planet and our fellow humans by helping companies better manage resources, so energy, water, waste, and carbon, and strengthen their business resilience. My team advises companies primarily through carbon management and accounting and the integration of carbon and climate into corporate governance. We also help companies set emissions reduction targets and develop strategies to achieve them. As you know, new standards, reporting requirements, and stakeholder demands have us considering how best to navigate compliance while staying focused on our primary job responsibilities. During our time together today, we will provide guidance on how one company, Lifetime, is addressing these demands and navigating client compliance with confidence. Welcome. Before we jump into the agenda, a few housekeeping items. If you have any technical issues during the webinar, please let us know in the chat and our team will assist you. Submit your questions into the chat, and they will be answered at the end in our q and a session. And any unanswered questions will be answered via email within the next two business days. The recording of this session will be provided via email, and the slides and additional resources can be found under the docs section. Following a brief introduction to our speakers, today we will begin with the context. Why are companies required to disclose and where disclosures are becoming mandatory? With specific regard to California climate law, we will address who this applies to, the key requirements, and when these disclosures are due. Then we will walk through some of the challenges that companies are facing as they prepare for compliance and the process that lifetime is following to prepare. Please note that we will not be getting too technical today. If you are interested in getting into the weeds on GHG accounting or climate risk, feel free to send me a note and we can connect afterwards. Today, we're gonna focus on the bigger picture with an emphasis on reducing friction for your compliance journey. Again, my name is Catherine Osborne. I've been with NGINpact for thirteen years. I have experience partnering with companies to develop strategies and plans to address energy, water waste, and carbon, and climate related challenges. I also enjoy looking at the opportunities that are available to businesses who are intentional about understanding stakeholder needs and developing solutions to meet those needs. A few years ago, I met Sarah and Bill as they were exploring how best to centralize data required for sustainability reporting. With Lifetime, this is one of those situations where their reputation precedes them. Wellness and healthy living is a fundamental part of my life, and the commitment of Lifetime to a healthy way of life is awesome. Lifetime provides a comprehensive ecosystem of programs designed to improve all aspects of well-being and the planet we call home. From inspiring places to results driven programs and passionate people, lifetime is so much more than a gym. Sarah and Bill, I'll let you each introduce yourself. Thank you, Catherine. I'm Sarah Imola. I'm the director of ESG programs here at Lifetime. I have been with the company for about fifteen years in a few different roles, kind of morphing from a procurement role, managing our facility operations and sustainability contracts into three years ago, the role that I have now, managing our broader ESG strategy, focusing on environmental impact, regulatory compliance, and public reporting. Hey, everybody. Super happy to be here. My name is Bill Moritz, and I serve as the energy director here at Lifetime. Been here right around eight years now, and I oversee all aspects of energy management, including bill pay, financials, renewable energy initiatives, rate procurements, energy and emissions reductions, and last but not least, regulatory compliance. Thank you. Alright. So let's jump right in to the context. So I'm a huge Simon Sinek fan. Not sure about you, but we're gonna begin with the why today. So why are companies being asked to disclose? According to the states and local governments that are asking companies to disclose, climate change is affecting our communities. We are seeing associated impacts to the global economy, and global economic and climate policy leaders have established that the long term strength of global and local economies will depend on their ability to withstand climate related risks, including physical impacts, economic transitions, and policy and legal responses. Failure of companies to adequately plan for and adapt, their organizations will result in harm to our businesses and to our communities in which we live, work, and play. So in the name of transparency and ultimately accountability to our stakeholders, we are seeing a shift from voluntary initiatives for disclosure of climate change and sustainability related information to mandatory compliance. In my work, I categorized the emphasis for near term, so 2025, '20 '20 '6 mandatory disclosures into three different buckets. The first being emissions, the second risk, and the third performance. So, in terms of lifetime sustainability journey, Sarah, can you share with us the story, behind your why and what is motivating this work? Yeah. So we talk about it in three different categories, business development, market position, and regulatory compliance. So from a business development perspective, we've always tracked the utility our utility usage really closely and how to focus on the overall sustainability of our buildings. From day one over thirty years ago when we built our first club in Eagan, Minnesota, the design used natural resources and its functionality such as full panel glass atrium ceilings to allow ample natural light throughout our spaces to light up our spaces throughout the day. But as our company ages, so do our facilities requiring updates to their internal mechanicals and exterior updates necessary. We've been able to use our emission emissions usage and climate risk mitigation practices to inform capital expense strategies, roadmap operational improvements, as well as inform our real estate and development team and potential environmental risks as they assess, our different expansion areas. I mean, also, our utilities fund holds a significant spot in our business operations financials. The price of utilities is something that we all know we have no very little control over, but what we can control is our usage. And even the slightest leak inefficiency or misuse can have a really negative impact on our p and l. So on our journey, we've used our measurements to educate ourselves on the gravity of impact of improper use and inform our plan for mitigation efforts. Secondly, our market position. As I mentioned, sustainability is a core value of our brand and important from to all of our stakeholders. But in the last few years, we've been asked more and more from current and potential investors about our sustainability initiatives. Have we set goals? What are our plans to reduce our emissions? And what we were able to do at that time was give examples of initiatives and programs that we had in place, but we knew we needed to go further. We knew we needed to further investigate how to capture and disclose our environmental metrics company wide, creating a really strong foundation for responding to environmentally focused investors, setting us aside, from some of our other less conscious peers. Also, our team member and member demographic is educated in ESG related topics, and taking those factors into consideration in their buying and working decisions. We're strategic in our approach to disclose that the information is digestible for our average member, and not being prepared for a public disclosure on this topic would definitely be perceived as a negative impact to us. And most importantly or most recently, our reporting obligation and why we're all here talking today, just trying to understand reporting obligations and what we can do to be prepared. This was our most urgent push to continue on this journey, as the pending regulation obligations continue to pop up. So as a public company, we know we don't have a choice. Since the SEC proposed regulations years ago, we knew well, we were gonna have some sort of reporting obligation, as we could see them on the horizon, whether it was scope one, scope two, scope three, climate risk, or any variation in there. Our goal was really to ensure that we had the proper data available and the processes in place to fulfill the necessary reporting obligation and avoid big hurdles or negative reputations if we weren't able to comply in the ruling. And while the SEC rule is still pending, California has forced disclosure and we have feel at this point we're pretty prepared to do so. Amazing. Thanks, Sarah. Let's take a closer look at where we're seeing states stepping up. So we currently have five states that are putting, forward climate corporate data accountability bills. There are new bills in New York, New Jersey, Colorado, and Illinois that are following the model of California's s p two fifty three in emissions reporting. And then the next couple of years, we really do expect to see additional states follow suit. Very few major companies will manage to avoid conducting business in these states, meaning that even though the bills are state level, they do have the potential for national impact. They do cast a strong net for emissions reporting with independent, third party assurance. These bills have a much better chance of getting through than the SCC did, rolled in of being enforced at the national level. In addition to the climate corporate data accountability, California and New York are also pursuing climate related financial risk reporting in California. The date, for s b two sixty one, to come into effect is currently 01/01/2026. This means that the time is now to work on developing a TCFD aligned climate related financial risk report to be shared via your company website. As far as I can tell, California doesn't plan to notify companies in advance that these laws apply to them. It's up to you to determine whether your company is impacted based on your revenue and operations in California. In terms of site level compliance, building performance standards or BPS, are an outcome based policy that aim to reduce carbon emissions from existing buildings. These standards look at, they look different in every city, state, and and county, but they're comprised of two key elements. The first is a performance target, so typically energy use or GHG emissions reduction. And the second is a time frame by which all in scope buildings must meet this target. So applicability is determined based on location, building type, and building size. And responsibility for compliance ultimately falls on the building owner, but commercial tenants may play a role in depending, depending on lease structure. Unlike with California's climate law, we are beginning to see companies receiving notifications of upcoming BPS compliance dates. As you can see here, Washington, Oregon, Colorado, and Maryland each have active state level standards with California and Massachusetts committed to a near term passage of, building performance standards. And across The US, as you can see, we have local standards popping up as well. So thanks to the Institute for Market Transformation and their support of the National Building Performance Standards Coalition, we have this map and guides documenting all jurisdictions that have passed or that are considering BPS. So, again, this is, site level compliance. Alright. I wanted to double click into the two new California climate laws as these are really the first, to come into effect at a large scale, and they serve as a template for those other states as we mentioned. So these do have slightly different due dates and the revenue thresholds for inclusion, so it's important to understand the details. The corporate, climate corporate data accountability law or GHG emissions disclosure, s b two fifty three, targets companies with more than a billion in annual revenue, while the climate risk law, s b two sixty one, tar targets companies with more than 500,000,000 in in in annual revenue. With potentially steep fines for non filing or insufficient reporting, we do recommend strongly recommend that companies do act now to confirm whether you meet the scope criteria, assess your readiness for disclosure, and then make a plan to comply with, s b two sixty one, as it's due on the first. Also, in 2026, a 2025 scope one and two GHG emissions inventory will be due. The California Air Resources Board or CARB has until 07/01/2025 to publish official disclosure requirements, as they work over the next four months to ensure the final guidelines are thorough and comprehensive, we do highly, recommend beginning preparations for these. So to recap, s b two fifty three disclosure requirements currently include a GHG emissions inventory with third party independent limited assurance. S b two sixty one disclosure requirements currently include a TCFD aligned climate related financial risk report. The core elements of recommended climate related financial disclosures include climate governance, strategy, risk management, and metrics and targets. So if you have not performed a climate risk assessment within the last year or so, this should be a priority, for compliance. The report must be published on the company website. So is there a chance that these could get canceled or delayed? There are ongoing legal challenges, and the laws will remain in effect pending resolution of these legal challenges. There have been amendments to the laws to modify certain details, but the timeline for both laws has remained intact. In any case, again, we do recommend being proactive and preparing for a 2026 disclosure. A company may be determined noncompliant through CARB, conducting audits or external groups reporting noncompliance since these disclosures are public. And if there's a violation, the state will issue, a notice of noncompliance with corrective actions of potential penalties. In terms of what California plans to do with these disclosures, again, the main purpose is to drive transparency and accountability to stakeholders. In addition to the annual revenue thresholds, the California climate law specify that, they are targeting companies who do business in California. And California, considers you to be doing business if you check any of the following boxes. So 2024 California sales exceed $735,019 or 25% of your total sales for 2024. 2024 California real and tangible personal property exceeds $73,005.00 2 or 25% of total property, or if you have at least one employee on payroll in California with a salary north of $73,005.00 2. They could be in an office or remote or working from home. If you're paying taxes in California, you're doing business in California. So, Sarah, if you could comment on Lifetime's determination of whether the California climate laws apply to you? Of all the things we've been asked to do through this process and information that we've had together, this was probably the easiest question for us to answer. It was fairly easy for us to analyze and determine if we were included as we currently have seven locations with a few hundred employees, in California within a plan to expand in the very near future. Overall, as a company, our annual revenue is 2 and a half billion plus and with some California locations bringing in over $2,000,000 individually each month. So a very quick answer to, yes, we absolutely knew that knew that we needed to comply and didn't want to, be subject to any of the penalties or fees. Thanks, Sarah. Alright. So we're gonna hop back over to BPS for a minute, with a focus on the site level energy use and emissions performance. As discussed, the exact requirements vary in every jurisdiction, but generally, the building owners will need to complete some or all of the following measures. So we've got annual benchmarking, which requires an annual submission of energy and water usage data via Energy Star. We have on-site energy audits, so those are ASHRAE level two every five to ten years, retro commissioning, which may be required in some jurisdictions. We have a BPS compliance road map and budget. So for this one, companies may be required to develop and submit a report outlining potential improvements, o and m plan, budget, and financial analysis for potential building investments. We also have building improvements and upgrades as well as renewable energy procurement. So here, I'm going to hand it over to Bill to talk about the lifetime portfolio and the applicability of BPS. Sure. So before diving into the building performance requirements specific to lifetime, let me first just provide a little bit more background on our company's building footprint in general. Lifetime has around right around a 90 club locations currently in 32 states and around 20,000,000 square feet. We're also a growth company expanding into new and existing markets. And while we wanna make sure our existing fleet is compliant, the real catalyst for us in putting a sharper focus on UPS was making sure that our new buildings are in accordance with compliance, and requirements. We invest a lot of capital in our new locations, so we wanna avoid building something that will be out of compliance within just a few years. Really, the last thing we wanna do is have to replace an expensive piece of equipment with an even more expensive piece of equipment short time after opening the location. So what we did here on the screen is we partnered with ENGIE to look at our entire portfolio of club locations and the corresponding requirements and prioritize where we should start. So we're looking at client states, the specific requirements, and if they require on-site energy audits. As you can see here, we're we're putting a heavy emphasis on Colorado due to the upcoming 2026 requirements and the fact that we have eight locations there already and more on the way. Some of these requirements present a unique challenges due to the designated base years. For example, Colorado has set 2021 as its base year. That's a period where we were still recovering from COVID with lower usage numbers such as requiring us to be even more strategic in meeting compliance. One there are a couple of gray areas here, and one gray area we've been navigating is the evolving requirements in some jurisdictions. For example, the Edina, Minnesota location on the screen here. We've had ongoing discussions with the city and fortunately, NGA has been a valuable partner keeping us informed about what's required. Additionally, Minnesota, as a state, is implementing its own statewide regulations, which will ultimately, we think, supersede, the city of Edina's local requirements. And we actually just Angie, called me today saying that the on-site energy audit for Edina is not going to be required currently. Another area of uncertainty is determining responsibility for BPS compliance in properties where we are a tenant rather than the owner. In some cases, we occupy a significant portion of a high rise building or a mall, and it's making it unclear whether the responsibility falls on us or the landlord. Well, it it typically rests with the landlord. It's not always the case, so it's highlighting the need for a more proactive approach when negotiating lease terms. Thanks, Bill. Alright. So now we have a lot of context, the who, what, where, when, and why for climate disclosure, shifting from voluntary to mandatory in The US. Now, let's talk about some of the challenges that companies may be facing. We have new standards and disclosures, new terms and concepts, new stakeholders, maybe new processes. As my six year old tells me about learning how to read, it's hard because it's new. And the first time you see it, sometimes it doesn't make sense. We can make it easier by breaking it down. So first, recognizing what's being asked of us and then where, can we refer to guidance? And then where might we be able to, find additional explanations? Who can help and how best to engage those folks? And finally, what are the steps that we need to take to get from where we are today to where we want to be? So in terms of standards, we have the greenhouse gas protocol for GHG emissions accounting and the TCFD framework for climate related financial risk. These are both common threads across, all the of the disclosures that we see, popping up. So I encourage you to either brush up on these or identify someone within your org to take this on, perhaps in partnership with an adviser. It's up to you, but these are fundamental. And then, of course, we have, the disclosures themselves. So I've included a couple of key examples here. The first you see here is CVP. This is a voluntary disclosure, used by more than 23,000 companies worldwide to report on various climate supply chain and environmental indicators. And if you're part of a supply chain, chances are you've been tapped, to respond to the CDP questionnaire, which aligns with, you guessed it, TCFD. And, we've talked about California quite a bit. These climate disclosure laws are estimated to impact more than 10,000 companies. Within the general, TCFD framework, there are 11 disclosures, with four core elements of how organizations operate. So the first is governance. You're asked to disclose on your organization's governance around climate related risks and opportunities. Then we have strategy. You are asked to disclose on the actual and potential impacts of climate related risks and opportunities on the organization's business strategy and financial planning where such information is material. Then we have risk management. You're asked to disclose the process used by the organization to identify, assess, and manage climate related risks. And then we have metrics and targets. You are asked to disclose the metrics and targets used to assess and manage relevant climate related risks and opportunities, again, where such information is material. So this framework really offers companies an excellent approach to developing an effective disclosure. So what else is new? Maybe not for you, but for some of the stakeholders, perhaps, that you are or will need to engage as you prepare for compliance. Here's a really common one. What is meant by scope one, scope two, and scope three? It's not all that uncommon to spend a significant amount of time educating stakeholders on this and other accounting related terminology. And how about scenario analysis? Think about the role that you're in right now and when you onboarded into this role. Did anyone ask you about scenario analysis? Likely not, but perhaps you are one of the lucky ones to, discuss it during your interview. This term and the concept behind it is new for many. So in the context of climate related financial risk, scenario analysis helps companies understand and quantify the longer term risks and opportunities associated with climate change. This involves modeling projections of prioritized risks for up to three future climate scenarios in the short, medium, and long term. Scenario analysis contributes to greater strategy resilience and flexibility by testing a strategy and strategy options against a set of scenarios, identifying possible future threats and opportunities, and serving as a basis for continuous monitoring and strategy adjustment. For the priority climate risks and opportunities, we look at the available models and then work to quantify the potential impact. So the three features that you see kinda illustrated here on the graphic are described by climate scenarios. So SSP and RCP are state of the art in terms of climate scenarios used by the peak scientific body on climate change, the IPCC. They are quantified through robust peer reviewed sets of models and connect to really help explore risks in a consistent way. We won't get into too much detail here today, but, this is another topic that may require some additional education and understanding as you pursue climate risk assessments with your teams. Socioeconomic pathways or SSPs describe how different socioeconomic futures could arise based on factors like population growth, economic development, and technological advancements. These pathways help us understand the potential socioeconomic challenges and opportunities that might influence greenhouse gas emissions. Now the RCPs are representative concentration pathways, on the other hand, provide the emission pathways resulting from the socioeconomic futures. They describe different levels of greenhouse gases in the atmosphere and their impact on global temperatures. RCPs are used to model the potential climate outcomes based on these emissions levels. So together, they help us explore both the physical and transition risks associated with different climate scenarios. What else might be new? Or perhaps this is just one that needs a little refresh. So a commitment to strong climate governance requires stakeholder participation up and down the organization. The TCFD standard asked companies to describe, the board and management's oversight and role in assessing managing climate related risks and opportunities. We also wanna consider how, how they've been involved to date, how the executive leadership team is involved, who's providing strategic direction and review of projects, Who is really operationalizing this work? And how are regions and sites engaged? This is where I believe that lifetime really stands out. I would love to hand this over to Sarah and Bill to talk about climate governance. Yeah. I can take that first. So it was really important to us that there was no one singular person making any of the big decisions here as we were learning and growing in the space. So we immediately started taking partners in various different business units to be able to come together to really provide input on a really valuable strategy. So starting from the top, we have ownership of responsibility around ESG related metrics, including environmental measurements at all levels. From our board, we have our nominating and corporate governance committees that has board level oversight for all formal disclosures and provides strategic alignment on targets and business objectives. We do have individual executive sponsors who have oversight of major capital investment needs, integration into our risk management process, and approval of our climate strategy. That executive leadership team also sits on our ESG steering committee. This is our cross functional group who monitors our progress and develops our action plans for regulatory compliance. Myself, I sit as the ESG program director and I'm responsible for the execution of public disclosure, program engagement within all stakeholders, data collection and regulatory compliance. And finally, we really view our biggest stakeholder group reporting as reporting on their own environmental stewardship metrics and those being our individual sites. I think Bill's gonna go into a little bit of those particular teams and their core responsibilities a little bit deeper. Yeah. Yeah. Relative to our regions sites, we we really rely heavily on our field teams to be our eyes and ears out there and sometimes even execute projects projects on our behalf here at corporate. Specifically, we depend on our facility team members to perform preventative maintenance tasks on our HVAC, pool systems, showers, laundry, and boilers, just to name a few. We also outsource certain PMs. But even then, the the site teams are responsible for holding our vendor vendors accountable to the work they are performing. We also rely heavily on them to investigate and identify issues we're seeing from anomalies and data tracking, whether it's on electric, gas, or water. We issue financial and usage targets for energy and utility spend to each location, and the club is responsible for managing to the plan. We also strategically have our regional engineers who support our facility teams throughout the nation. They re they report up through my property management organization here at corporate so that we're even more aligned with strategies inclusive of energy and emissions. So I thought it was important to bring up just who the people are in our organization, who sit on the steering committee committee, and the roles that they play. So this is a a list of some of our our individuals. And before the SCC proposal and the California rule ruling came into play, we were really leading these conversations with talking about brand reputation, giving, you know, specific business use cases, enhancing operations. But then later in the year and as we've gone on, and with the power of our legal and risk team specifically, we've developed the ESG steering committee based on who's responsible for the actual inputs into the required compliance metrics. So as you can see, we have at least one individual from our real estate team, business or building operations, finance, legal, risk along with our executive sponsors, in some of the business functions. Thanks, Sarah. I just wanna stop here for a minute to underscore how amazing it's been to work with the ESG steering committee at Lifetime and a shout out to to Sarah Mill for engaging so well across the organization. The success that we're hearing about today is due in large part to what I believe is the cross functional engagement. So high five to you both. Alright. So, this is our final section for today. We're talking about the preparation. So we're gonna dive into the process of preparing. We will talk through emissions, risk, performance, and then we're gonna tie it all together. So emissions reporting is a foundational element of California's s b two fifty three and other proposed climate corporate data accountability bills. Sarah, if you could tell us about the process that you are following and your experience in, preparing for GHG emissions disclosure. Yes. So as you all heard Katherine speak to a few different standards and disclosures and frameworks, it all got kind of jumbled and they all seemed like nice to have. So we found ourselves in a position to begin to question our own company need to have, knowing at the time, this was a few years ago, that all disclosures were optional. And it was really daunting to say the least. So we asked NGE as our long time trusted partner in our energy bill pay and energy management space to help us understand all of it because we weren't experts in the space, and then to help us define what was more most important to us and define our path. So step one was to simply produce our scope one and scope two inventory that was most frequently asked by our stakeholders. What are you doing in scope one and scope two? How are you defining it? How are you reducing? They walked us through all of the necessary company data that we needed to gather and educated us on the overall process, to better understand how each piece fit together using the greenhouse gas protocol as best practice in the space. We'll use the basis of that exercise to continue as we further our engagements in scope three and future. In our first year of the engagement, we also completed an inventory management plan to document all the processes and methodologies used to comply sorry, used to complete, not comply, complete our inventory. This serves as a guide on how we'll go to all the metrics disclosed and should any one of us not be involved in the near future, there is, a document that provides audit readiness. And when we choose to have our inventory third party verified, and, they will have all of that necessary information right there in the inventory management plan. Thanks, Sarah. As you all know by now, California's SB two sixty one and other proposed climate risk regulations, do require disclosure of climate related financial risk and mitigation plans. So the way that we approach this work with Lifetime, began first with a risk mapping and materiality exercise. Then we looked at all the potential climate related physical and transition risks, for every physical hazard, for example, the vulnerability and impact were mapped. A likelihood and consequence rating were given, and this produced a maximum consequence rating linked to lifetime's level of risk. If adaptation measures were in place, this did lower the risk rating, and this is where the resiliency, comes into play. Through interviews, we understood the most critical risks and opportunities occurring, within the business operations, and we held a workshop with ESG, steering committee to prioritize those risks and opportunities to ensure that the right issues were the focus, for the climate risk assessment, scenario analysis, and then the financial impact analysis. Sarah, if you could speak about your experience here. Yeah. This was an extremely informational exercise for myself and others on the steering committee to just be be more strategic and think about how we're thinking about the near far near and far term. Now as you can see in the first slide by all the colorful boxes, we touched on so many different risk categories, sparking really relevant conversations we as a group hadn't had before. It highlighted not only some of the climate risk challenges we face today, and that's what we were talking about, what are we facing today, but also showed us a different predictive climate modeling that could help us identify short, medium, and long term climate related risks and their potential impact on our company looking as far out as 02/1980. One of the most obvious risks that came out of the analysis was water scarcity, drought. For those of you who are familiar with our clubs or are not familiar with our clubs, we have a lot of water use within our clubs. It's a part of our business model and who we are. So we have vast landscaping, landscaping requiring sophisticated irrigation systems. We operate many unique bodies of water, some locations having four pools, two spas, cold plunge pools, and so on. We also run like a hotel with our showers running consistently throughout the day and on in an on-site laundromat in almost every single location, washing towels sometimes twenty to twenty four hours every single day. So water is a huge factor in our business model and our overall member experience. This paved the way for discussion on how we can mitigate that risk and to better be prepared for climate change in the future. Yeah. So let me add on to that specifically around the water mitigation measures that we've already implemented. We've already installed low flow shower heads and these specially designed shower heads operate at 1.25 gallons per minute, taking each club's specific PSI into account and still provides an optimal showering experience for our members. This upgrade not only reduces our water consumption, but also lowers gas usage, which enhances overall efficiency. In in addition to that, we've already installed low flow aerators in our sinks and low flow toilets. On the opportunity side, we we have an opportunity to optimize our laundry process by enhancing leak controls and implementing proactive preventative maintenance. In the future, we may even be able to transition to cold water laundry system, which would further reduce both water usage and energy consumption for heating. We still have opportunities out there to implement even more advanced irrigation systems and zero scape zero scaping. Recently, we actually partnered with one of our club teams and a landscaper out in, Roseville, California to eliminate turf grass and replace it with drought resistant plants. We're gonna be saving significant dollars on irrigate on irrigation water. And, honestly, I think it looks better than it did in the first place. And not to mention, we worked with the city of Roseville on this project where they're actually rebating us a portion of the cost to do this work. Some other things out there and opportunities, we have, member facing sustainable towel use practices that we could implement in the future. And one of my favorite things that we haven't done a lot of yet, but I want to in the future is do further submetering and advanced analytics leveraging pool controller data to identify access water usage more real time. Next up here. Okay. So alongside our preparations for building performance standards, we've already begun mapping out emissions reduction strategies through our participation in the Department of Energy's Better Climate Challenge. This, process has helped us, pinpoint key efficiency measures, determine determining the best approach to electrify our fleets, and also assess where and how to integrate renewable energy in their operations. The on-site energy audit requirements through BPS will provide valuable insights into our energy use, allowing us to make more targeted reductions in both consumption and emissions. For example, accurately assessing the emissions reduction impact of electrifying space heating, for example, requires a clear understanding of how much natural gas is currently being used for that purpose. And finally, on performance reporting, this really drives us and motivates us to develop well structured plans and to gain broader support and effectively and to effectively execute on our strategies. Thanks, Phil and Sarah. So here we are. This is our final slide. We're gonna wrap it all together. So the first, mandatory disclosure deal is California SB two sixty one, which requires TCFD aligned reporting as we've been discussing. To prepare for this in parallel to the work covered in the last three slides, we do recommend performing a TCFD aligned gap assessment to map the current climate disclosures within, with the TCFD framework, assessing the completeness, of your current disclosures across the 11 TCFD requirements and noting those gaps. We also recommend a peer benchmark, and a look at sector specific metrics, targets, and trends. We typically look at at least three peers. That's our recommendation. We look at their climate disclosures kinda side by side. So using CVP, the 10 k, ESG reports, whatever you can find. Wherever you have identified gaps, see if the work that you are doing in terms of the emissions inventory development, risk assessment, mitigation plans, and performance targets, the work that you're doing now, can that help close those gaps? And then you take all of this a, b, c, d, e, and then you develop your disclosure responses, making sure to address any remaining gaps, with the narrative. You'll circulate this with internal stakeholders keeping in mind that this could take anywhere from one to six weeks depending on who needs approval, whether that review is internal to the organization or external as well. You'll integrate any feedback into a final report with, hopefully, help from your marketing and communications teams. And finally, then share a copy of the report with external stakeholders, on or before January 1, as that is the deadline. So if you wanna take a minute right now to consider, how much of what we shared today was new information for you, and we'd love to hear from you in the chat. If you'd like, what has your company done so far to start preparing? Where does compliance with these regulations fall on your list of priorities? And what concerns you most about being able to meet these requirements? So you can make a mental note, jot down some thoughts, scratch on a piece of paper, share it with us. But my hope is really for you to come away from our time today with a good idea about the next step or steps that you need to take to ensure readiness for compliance. Really, the last thing that I wanna see is for all of us scrambling the second half of the year. So kudos to Sarah and Bill for getting the ball rolling on this early, and a huge thanks to both of you for joining me today to share your story. Thanks, everyone. Alright. See, I'm gonna stop sharing my screen, and we'll go to see if we have any questions. So we have a question. What about Graywater use? So that would be for they'll probably for you. Yeah. I think both, Sarah, and I can speak to this. I I I guess we could add that to the list of opportunities and our mitigation measure measures. Right? We've looked into it a little bit. We don't we aren't really doing a whole lot of it right now. Sarah, I know you've actually in preparing for our next ESG report, you've actually been looking into this recently. Do you wanna comment? Yeah. I think what we're doing most in all water spaces is just really understanding the inputs and outputs. I think that is, based on our climate risk assessment, somewhere where we need to focus, where we have not put as much focus because it hasn't been something that we have been challenged on as much recently, or in the past couple of years, but it's definitely something that we are now gonna shift our focus to to better understand both inputs, outputs, and our water inventory as a whole. So I know that doesn't really answer your question, but it is a part of the overall water inventory that we need to better understand ourselves. Thanks. We have another question. How how does a multiple state building owner learn which states and you miss municipalities are requiring or have pending legislation for GHG reporting and or auditing. I agree. It is very difficult to try to keep track of all of this. This is what our our team does, and we try to compile these lists, as Bill mentioned, for all of the site level activity that's happening around building performance standards. In the additional docs section, available here today, we have linked you directly to that website. So that's nice because all of those have been, I mean, it's updated daily, weekly in terms of, where, there are requirements. So that is one good resource. Also feel free to reach out to us. We can look at your portfolio alongside, what we have pulled together. So that is another option. We tried our best today to kind of highlight where we're seeing the most activity, and a copy of these slides from today's presentation should also be available in the additional doc section so you kind of have those maps. Alright. Well, if there are no other questions, we will call it for today. If you do think of anything, feel free to reach out. Katherine Osborne, first name dot last name at n g dot com. And I hope you all have an amazing rest of your day. Take care, everyone.