Operationalizing HVAC/R Compliance

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Operationalizing HVAC/R Compliance

To reach compliance success, are you ready, willing, and able to look even deeper into your business?

Your entire refrigerant emissions compliance program must remain an intentional and integral part of your consolidated operation. We call this process Operationalizing Compliance. It’s the process TrakRef created to ensure you stay fully compliant with the vast, complex array of regulatory requirements. But don’t worry. We explain everything right here.

No matter what type of facility you own or manage – manufacturing, commercial office, hospitals, data center, grocery or convenience stores – you are responsible for recording, tracking, managing, and reporting your refrigerant usage and HVAC/R maintenance. And regardless of your property type, your maintenance regime falls into one of 4 categories

  1. Reactive (breakdown or run to failure)
  2. Preventative (time-based) 
  3. Predictive (condition-based monitoring)
  4. Prescriptive (Reliability centered maintenance)

HVAC/R appliances are considered important to our businesses and critical to our daily lives. Without them, our data doesn’t move efficiently, food spoils, and summers are unbearable. The refrigerants consumed at your site are part of Scope 1 emissions, which are reported in Environmental Social & Governance (ESG) records. Our performance-based formulation of activity guidance helps you achieve compliance success, as well as maintenance improvements. This proven solution answers the complex challenges of successfully reducing refrigerant emissions, meeting the demands of the patchwork of federal, state, and local regulatory requirements, and engaging your stakeholders in achieving your compliance and sustainability goals.

Our experienced team shares conclusions based on how to achieve successful compliance and sustainability goals while engaging your entire workforce. We apply a performance-based process that guides decision-making in real time and uses a hybrid data collection system that supplements traditional work order systems.

Technology supplementing people, combined with a robust infrastructure and dynamic policy awareness, aligns with your protocols for structure to guide your workforce, improve accountability, and ensure success in meeting compliance and sustainability goals.

The relationship between maintenance regimes and compliance

It’s simple: You cannot remain successfully compliant – or sustainable – without total buy-in from your team. An organization’s commitment to legal and regulatory compliance is essential to the integrity of that company’s brand. I once heard someone say that “Accountability is based on honesty that acknowledges where things can improve and a humility that tempers actions. Real accountability happens in the context of a culture that supports trust and genuine teamwork.” 
To achieve successful compliance, accountability is necessary and achievable if you set clear goals, define policies, and choose the right team.  
Certainly, compliance requires knowing what is happening deep within your business. Often, companies don’t lack the willingness to comply, they lack a wide spectrum of understanding. Meaning, perhaps you have the data, but you also need the human and operational insight to successfully measure or manage all the relevant data available to you. The tempo and structure of your maintenance program have far more to do with your maintenance success than the compliance policies used to comfort senior leadership.

I’ve never liked the old saying, “If it ain’t broke, don’t fix it.” A terrible philosophy. It forces you to fail before improving something. Likewise, if you have a reactionary maintenance plan and wait for things to fail, then you’re just waiting for the inevitable violation before fulfilling your responsibilities to reduce leaks and have periodic equipment inspections. The best approach: establish maintenance plans that provide better insights to key attributes like installed capacity, leak rate, and equipment condition, and age.  

Accountability is only achievable when you commit to zero excuses. Why? Because for every known situation you excuse, there are at least two more that you don’t know about. A sign of weak leadership is an inconsistent, even contradictory standard of performance, where people focus efforts on corroboration – everyone agreeing to fail – rather than finding a better solution.  When an organization bases its culture on honesty and integrity it enables people to discover and discuss flaws without fear of retribution. In an open, safe landscape they can work with the team to reflect, learn, and move forward.  
In the days prior to the 2003 destruction of the Columbia space shuttle, which killed seven astronauts, NASA managers spent two weeks downplaying the seriousness of a piece of foam that visibly broke off the left side of the shuttle during launch. They rejected engineers’ urgent requests to assess the unknown extent of the damage. This could have been accomplished by satellite photography or closer examination during a space walk to inspect the area in question. Neither recommendation was carried out. The major failure went largely undetected until its fatal consequences 16 days later.
(see “Facing Ambiguous Threats,” by Michael A. Roberto, Richard M.J. Bohmer, and Amy C. Edmondson, HBR November 2006)

Your compliance success directly reflects the maturity of your maintenance program. The business as usual approach to compliance is to wait until the end of the year, collect the data, and then apply the data to your compliance triggers. Basically, when you follow this format you are reviewing transactions and activity from last year and seeing how bad things were. Failure is born here. Operationalizing Compliance entirely updates this process and engages your team by operationalizing the requirements and capturing data needs while documenting the repair. This means building an effective, transparent, ongoing system into your operation that invites all stakeholders responsible for measuring and reporting refrigerant emissions.


Build a “Defensible” Compliance Program 

Defensible Compliance is the act of instituting a set of policies and practices that ensures activity and actions are rationally protected from the risk of violating regulatory or company requirements.

The worst-case compliance scenario for any company is an active investigation. Authorities begin auditing your operations seeking multiple violations. As they begin auditing, you’re trying to do your job while attempting to understand what factors prosecutors use in determining whether to bring charges against you. Your day ends negotiating a plea deal or facing other penalties.  

Over the past few years, the DOJ determined that “the adequacy and effectiveness of a corporation’s compliance program at the time of offense, as well at the time of charging decision will play a significant role in making this determination.“ 
United States Sentencing Guidelines advise that consideration be given to whether the corporation had in place at the time of the misconduct an effective compliance program for the purposes of calculating the appropriate organizational criminal fine.
Compliance related to refrigerants (F-gasses) and HVAC/R maintenance is no longer the sole domain of the Federal EPA. Today property owners and managers must also pay attention to State requirements, local codes, and, for publicly traded companies, reporting ESG filings to the SEC. The new compliance requirements call for three key things:

  1. Data used for record-keeping and reporting must be “Investor Grade” not just invoice grade information.
  2. Compliance goals need to be operationalized. This necessitates governance expanding far beyond policy update routines and embracing a more robust operational role.
  3. Your organization’s reputation is always at stake, especially in this business and social societal climate. Risk management must be calibrated against the reputational threats that lurk around every corner.

A defensible compliance program is not simply one that shares its recently updated guidelines, but instead implements a plan that is well communicated, understood, and actionable. Proving that your compliance program is defensible requires an unequivocal ability to demonstrate that your teams follow all processes to the fullest extent. Further, it means implementing a plan to act effectively when conflicts arise and that can accommodate any escalation needs. In essence, you absolutely never treat every situation in the same manner..

Precious time is wasted littering reports with errors while a compliance team is trying to white knuckle the entire process manually at the request of an investigator or auditor. Instead, let technology handle the manual complexities, thereby allowing you to focus on your core business without the risk of being investigated with every transaction. 

Program elements like automated review, established workflows, intelligent distribution, rules guidance, version control, time and date stamp, and full audit trails and reporting must be applied and should be thoroughly automated and streamlined processes.

But beware of starting your policy review process at the beginning of your journey. Just get going with your operationalizing compliance program and reserve the policy review until a later stage. Embrace terms like “asset attributes,” “asset governance,” “activity management.” Then choose a digital platform to initiate and implement your defensible compliance program. Improvements and adjustments can be made over time as your needs change and specific situations reveal themselves.


As you get started, consider these three A’s when planning your road map to a defensible compliance program.

Assets – Your asset registry is the heart of your compliance program. Standardize the data capture process and be specific as to the key requirements that define both your compliance and accounting needs. The more closely your digital environment looks like your real-world environment, the better your data collection will align with your goals.

Actors – These are all the stakeholders in your entire compliance program.  Contrary to the former Business As Usual Approach, you need buy-in everywhere from everyone in maintenance, operations, finance, sustainability, compliance, and management.  

Activities – Knowledge of the repair process must be accompanied by a keen awareness of how to properly document the work. Engagement at every level means governance at every level. But you should think of them more as guide rails rather than central control.

Many companies already use a Computer Maintenance Management System (CMMS). And yes, it may seem logical to expand CMMS in an attempt to capture compliance needs. However, CMMS systems lack the data structures robust enough to hold value when establishing compliance processes. Some routine missing elements might include proper attributes and logic around the attribute values.
The invoice is a relic that’s valuable merely to accounting – only defining labor and materials. To operationalize compliance, you need to apply new thinking that supports your stakeholders (who are NOT in finance!).
Regulations aimed at protecting consumers, investors, and workers are nothing new. What is different now is the pace, scope, and patchwork roll outs of these regulations. This hodgepodge dynamic places significant demands on “do it yourself” oriented teams due to the technical nature of the regulations and scope of penalties levied for non-compliance.

Historically, executives counted on their in-house colleagues to monitor emerging rules and provide procedures to implement that would – hopefully – meet requirements. This kind of passive strategy no longer works in the current global environment.

Economics and Effectiveness

Organizations one maturity level higher between 2017 and 2020 were, on average, 7.6% more efficient (lower operating expenses per dollar of revenue) and 2.3 percentage points more profitable (EBITDA as percentage of revenues).

For every organization, the path to compliance success has very specific milestones that include improving team knowledge, elevating maintenance maturity, and establishing a solid, well defined asset governance plan.  

So where are most companies on this journey? According to the 2020 Oxford Economics Intelligent Operations and Accenture study, only 7% have already risen to the highest level of maintenance.


 Accenture Research and Oxford Economics Intelligent Operations Survey, 2020


Of the 400 companies studied by Accenture & Oxford, 93% had further to go in reaching next-level maturity. However, some industries were doing better than others. For instance, media and healthcare companies saw only 4% of respondents achieving “Prescriptive level Maintenance.” Combining the Oxford results with a cross section of existing and new Trakref clients, only 4-7% of all companies are compliance ready. The bottom line,  a stunning 93-97% of companies have further to go on the journey to compliance success.

The costs of managing this journey are offset by significant savings and a drastic reduction in transaction tasks. Savings come from a reduction in material losses and risks associated with equipment failures, reductions in energy consumption, and extended equipment life. Further, in the case of the Accenture / Oxford Study, finance professionals decreased their time on transactional tasks from 89% to just 17%, a reduction of 72%. Efficiencies, control, visibility, and process performance at this company (a medical device manufacturer) all rose across global operations, improving the company’s balance sheet integrity within just two years. Specifically, it gained approximately US$77M in working capital.

Using the cloud for compliance to fit within your organizations path to success

Insufficient information disables a business’s ability to invest correctly in creating a successful compliance program. However, this is not the only, or even worst, problem. No. The biggest challenge is the lack of staff necessary for gathering and processing the information which, in turn, is caused by the incentives of managers to invest in things other than the staff and information-gathering efforts.

Example: Many grocery stores have sub-metering devices that tell when something leaks, however less than 5% of all leaks are identified with one of these Leak Detecting Devices. Another challenge is cost averaging which reduces the visibility of costs related to specific products or even departments. Emissions have remained at 25% average for more than 20 years, even though technology has advanced. 
Technology helps streamline the deployment, allows for centralized control over processes and data, provides push button analyses, and should facilitate prioritization.
At Trakref, we have always believed that the most defensible processes are those defined by collaborating competitors and peers in the same industry space. Internal and external collaboration is key. This is a “team” event, a team pulled together by TrakRef’s experience and breadth of knowledge. We see the whole landscape and understand how to navigate the minefield of ambiguous rules and regulations. Like an experienced Harbor Pilot, we are in a singularly unique position to guide even the largest ships safely to port. The tide is always different. The weather changes constantly. And no two boats are alike. But the goal remains the same. To dock safely without incident.

Successful compliance demands people doing their jobs the right way. Most compliance failures are related to data or resources siloed in one place that might be needed in another. So how do you collaborate with peers and competitors in the same space in order to ensure you’re using industry best practices?  

First, it all starts with protocols and published best practices. Trakref reviews and adopts protocols from a broad set of industries. We find common ground between all the processes and then set controls around attributes when capturing service. As mentioned, compliance programs pivot around three key areas: assets, actors and activity. As we evolved we realized that each of these three groups has their own special logic process. And each individual set of logic needs to be structured and real-world enough to provide the workforce with a digital representation of the world they are familiar with and work in. This is just one of the reasons Trakref has the uncommon ability to harmonize a broad variety of standards, protocols, and processes that overlap and conflict. How? We automate this entire process at scale. Then we augment your human talent with proven technology and provide your team with useful insights and guidance within the rules. Finally, everything we do is driven by best practices based on Industry accepted protocols.
A Harvard Business school survey determined that 21% of respondents from weak-execution companies thought information flowed freely across organizational boundaries whereas 55% of those from strong-execution firms did.
Essentially you cannot achieve successful compliance without improving the maturity of your maintenance planning. As you improve compliance results, you will also improve maintenance planning and vice versa. These two elements are perfectly aligned – and the DOJ knows this

Remember: by managing the tasks you are supporting tactics that lead to success. This is the benefit of Trakref. As we manage the tasks, you finally achieve compliance success.

CMMS & the Compliance Paradigm

Computer Maintenance Management Programs is software used in scheduling and recording operation and preventive/planned maintenance activities associated with facility equipment. CMMS  generates and prioritizes work orders and schedules for staff to support “trouble” calls and perform periodic/planned equipment maintenance. Upon completion of a work order, performance information, such as the date work was performed, supplies/inventory, and man-hours expended, typically is loaded into the database for tracking, which supports future operations/planning. These systems are critically important to proper maintenance planning and even invoice tracking. But they lack the formal compliance structure needed when scaling a compliance program.  

Key vulnerabilities include lack of structure around assets, weakness in activity management, and the inability of CMMS systems that are designed to provide broad groups of teams access to various asset types.  

Equipment can be put into three categories, 

  • Class 1 – Critical assets such as refrigeration, AC, process cooling, generators (some water systems). This group of assets must meet certain compliance requirements.
  • Class 2 – Important assets that are technical in nature and require specialized maintenance including alarm systems, vertical lift equipment, plumbing, heating, and lighting.
  • Class 3 – This class of assets does not have the same depreciation cycle, is less technical, and has a broader workforce that can service it. For example: landscaping items like parking lots, grass, culverts.

CMMS systems must accommodate all these classes of equipment. Your digital compliance solution should be hyper focused on the regulations that specifically impact your equipment and responsibilities.  

Our work world requires structure and processes in order to ensure we deliver quality investor grade data. Trakref’s focused solution integrates with most CMMS systems (although we have preferences). We have co-opted terms from the Work Order (CMMS) world so that the workforce using Trakref won’t feel foreign or too novel a solution. Similarity breeds familiarity. This increases engagement. Trakref is your bridge between the needs of compliance teams and the workforce that does the work. Trakref exists solely for compliance teams, but it was designed by service people.  

CMMS and invoicing systems remain extremely valuable tools, but they fail in delivering on the needs of compliance or sustainability teams.  


Conclusion: Environmental Governance &  Greenwashing 

“Refrigerants punch above their weight class,” with one pound of refrigerant equal to as much as 5 tons of carbon. These are important and useful chemicals. When working safely in their place, they do their job well. The problem, of course, is that they leak. And leaks are rarely managed well. Remember, a small leak in a small system can contribute 20-100 tons of carbon, or about the same carbon that 5-20 cars use in a year.  

Investor demand for financial products and services that incorporate Environmental, Social, and Governance factors has increased dramatically in recent years. In response to this demand, a range of investment advisers have offered several ESG investing options, including registered investment companies and pooled investment vehicles, such as private funds and separately managed accounts. 

In making investment decisions, many advisers and funds now consider ESG factors along with other make or break determinations. These might include elements like macroeconomic trends or company-specific considerations. Price-to-earnings ratios are examined to enhance performance and manage investment risks. Others focus on ESG practices because they believe investments with favorable ESG profiles may provide higher returns or result in better ESG related outcomes. And they are absolutely right in making this conclusion.

Unlike financial assessments made by investors, assessments made on past performance, the Performance Based Formulation examines and determines how things are right now, not last year. This is how Trakref helps companies achieve compliance success, by consistently providing the most successful solution to the complex challenge of reducing refrigerant emissions, meeting the demands of the patchwork of regulatory requirements and engaging the workforce of stakeholders in the success of achieving compliance and sustainability goals.
“Technology supplementing people, combined with a robust infrastructure, and dynamic policy awareness when aligned with protocols for structure can guide the workforce, improve accountability, and ensure success in meeting compliance and sustainability goals.”
The other stakeholders might want to just skate by and barely meet the minimum compliance threshold This destined to fail, business as usual attitude is woefully obsolete. It is urgently time for a change.

Fortunately, Trakref is a bunch of goal based, refrigerant policy geeks – obsessed with reducing refrigerant emissions – who use software to help improve data capture in very smart ways that lead to successful compliance, improved sustainability, reduced costs, and drastically reduced leak rates.

With current – and future – developments in technology, regulators expect you to use it completely and competently. From their point of view technology allows them to see behind your curtain. “Greenwashing,” the practice of faking results for better optics, is never a winning strategy. So, you must either remain compliant and show them what’s there or try to hide it all behind a wall of excuses. But they won’t buy it. In their ruthless – and valid – pursuit of the truth, they will find everything. And so will your investors.

If your maintenance program is not aggressively following best practices in refrigeration emission management, then your compliance program cannot succeed. Limiting your maintenance to just the application of software is a dead end. Technology alone does not and will not bring you successfully into compliance, especially now as federal requirements from several agencies grow more stringent and complex. Indeed, the compliance challenge increases more rapidly at all levels, not just federal. Without a holistic approach you will continually fall further behind, making it all the more difficult to catch up. Not to mention putting your organization at increased risk of investigation, penalties, investor backlash, and collapsing valuation.

TrakRef operates from the firm belief that failure is not an option. 

Business as usual guarantees that failure is the only option. Without a defensible compliance program that remains steadfast in its dedication to stay far ahead of the complex regulations constantly nipping at your heels, you are at risk of ever increasing dilemmas in your operations.

This is no time for complacency. Now is the time to act on your own behalf, for your own benefit, by taking this unique opportunity to leap ahead of the inevitable dangers. In fact, there has never been a better time to take advantage of the wisdom, experience, and tools available to you right now.

Your choice is simple. Wait for the headaches and problems to disrupt your operations. Or, fully operationalize your compliance by taking action and shielding yourself from the unavoidable perils of compliance reporting failure.

Finally, ask yourself, what are you truly waiting for?

Our experienced team of refrigerant geeks will be going into more detail about these trends next week at our Operationalizing HVAC/R Compliance Open mic on Thursday, September 16th at 1:00pm EST.
Register Now  
Reserve your spot now to learn more, and get your questions answered by the refrigerant geeks! As always, thanks for joining us here on our blog, and we hope to see you next week at the event. 

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