Executive Summary

Essential Services Intermediate Holding Corporation (“Turnpoint Services” or the “Company”) is a leading provider of residential and commercial plumbing, heating and cooling services, electrical services and contracting work.  The Company was organized in the State of Delaware in November of 2020 and provides services in 30 states throughout the continental United States through its wholly owned subsidiaries.

Climate-related risks and opportunities are increasingly important to how management evaluates the Company’s business resilience and strategy. Management recognizes that physical hazards such as extreme heat, storms, and flooding can disrupt operations and supply chains, while transition dynamics such as regulatory requirements, energy-efficiency standards, and evolving customer expectations can influence cost, capital allocation, and growth. In response, the Company is beginning to integrate climate considerations into governance, risk assessment, and infrastructure planning.

The purpose of this report is to disclose how the Company oversees and manages climate-related issues. It provides investors, regulators, and stakeholders with insight into how management is addressing climate exposure today and planning for future resilience. This report also demonstrates the Company’s commitment to accountability and alignment with California SB 261 and TCFD climate reporting standards.

1. Governance

Board Oversight

The first substantive Board-level engagement on climate-related matters occurred in 2023, following the Company’s procurement of an ESG consulting report that outlined climate and environmental management as potential priorities for the business.  In 2024, management became subject to California vehicle emissions requirements, which resulted in the deployment of 18 electric vehicles to ensure regulatory compliance. Since that point, the Board has approached climate risk primarily through a compliance lens. Management has reported to the Board on key regulatory developments and operational adjustments necessary to maintain compliance, including California SB-261 and SB-253.

While the Board has not yet elevated climate to the level of a strategic enterprise risk, its oversight role is gradually expanding in practice. The Audit Committee continues to review climate-related regulatory compliance as part of its financial reporting and risk oversight responsibilities. At the same time, the full Board has begun to consider the broader infrastructure needed to support compliance readiness, including:

• Data monitoring and collection: ensuring management can capture reliable energy, emissions, water, and waste data across operations, including leased facilities.
• Baseline assessments and target setting: recognizing that establishing an emissions baseline will be important to compliance with California law and future efficiency initiatives.
• Strategy alignment and mitigation efforts: reviewing management’s responses to regulatory drivers, such as fleet electrification and other energy-efficiency measures, to ensure they are practical, cost-effective, and compliant.
• Governance processes: beginning to integrate climate topics into the Board’s agenda at least annually, with the Audit Committee acting as the focal point for oversight.

Management’s Role

Management evaluates climate-related risks and opportunities primarily through the lens of regulatory and compliance obligations that affect the Company’s operations. These regulatory-driven changes illustrate how climate risk can create financial and operational impacts, which has helped to shape management’s current oversight.

At a high level, the Company’s management team is a cross-functional group including Legal and Finance, with operational input as needed. This group monitors compliance developments, coordinates data collection where required, and ensures that regulatory requirements are met in a timely manner.  The finance function is primarily responsible for ensuring alignment with these compliance requirements, having taken the lead in disclosure planning, initial work toward emissions-data collection, and alignment with standards.

Climate-related issues are escalated to the CEO when significant and are reported to the Board as necessary, typically through the Audit Committee. This ensures that management’s insights on regulatory readiness and compliance are effectively communicated to the Board as part of its overall risk oversight responsibilities.

Strategy

Time Horizons and Risk Identification

In preparation for California’s SB 261 disclosure, the Company is beginning to assess climate risks in the short term (18–24 months), with a focus on transition risks that are known and regulatory in nature. This includes preparation for compliance with California SB 261, SB 253, and the EPA AIM Act refrigerant transition requiring the use of low-GWP refrigerants (R-32 and R-454B) beginning January 2025.

In the longer term (3–5 years and beyond), broader considerations, such as chronic physical risks, or broader market-wide transition activities, have not yet been incorporated into the Company’s enterprise risk assessments or strategic planning. At present, the Company’s climate oversight and risk evaluation are grounded in short- and medium-term compliance and operational readiness.

Physical Risks & Opportunities

To complement the Company’s qualitative risk identification, management conducted a physical climate risk assessment using First Street Foundation’s risk modeling, under the SSP2 “Middle of the Road” scenario, across both current (2025) and long-term (2055, 30-year outlook) timeframes. Risks were evaluated for 1% annual probability (100-year event) across the Company’s physical footprint.

Physical climate risks are isolated across the Company. For the business, these risks translate less into direct structural impairment and more into challenges around operational continuity, workforce mobility, and volatility in lease and insurance costs. Flooding is the most geographically widespread exposure, spanning hurricane surge in the South and inland rainfall in the Midwest and Northeast, but the Company’s overall exposure is relatively low according to First Street models. Wind hazards cluster around southern coastal markets, especially Florida, where hurricane systems combine strong gusts with surge-related flooding. Heat extremes emerge in Florida, where both leased facilities and service operations are stressed during peak demand. Fire risk in the West is more localized but material where it appears. Cold extremes in the Midwest underscore the importance of winter storm resilience and workforce access.

Due to the nature of the business, it is important for the Company to be prepared for these hazards in each community it serves. Continuity of operations is important to ensure the Company, and its subsidiaries, have access to equipment and materials to help customers respond to these same hazards in their homes and businesses. Operational resilience related to physical risks allows faster responses to occur.

Management also recognizes that supply chain disruptions stemming from future physical climate impacts could affect equipment availability and delivery schedules.

Physical climate impacts may also present indirect business opportunities for the Company. Extreme weather events often lead to increased demand for the Company’s essential services. For example, following hurricanes and severe storms, the Company typically experiences higher generator sales and greater demand for HVAC repairs and replacements. Prolonged periods of elevated temperatures are expected to increase demand for high-efficiency cooling systems, which may generate additional revenue. Similarly, flooding and drought conditions can create opportunities for plumbing upgrades, sump pump installations, and water filtration services.

Overall, the Company’s exposure to physical climate risks may result in short-term operational challenges but may also expand market demand for the Company’s core services.

Transition Risks & Opportunities

Policy and Legal

Compliance with California SB 261 and SB 253 increases reporting costs and creates reputational and legal risk if data is inaccurate or late. In addition, the EPA AIM Act requires that, beginning January 1, 2025, all new residential and light commercial air-conditioning and heat-pump equipment must use lower Global Warming Potential (GWP) refrigerants. This requires transitioning away from traditional refrigerants used in HVAC equipment to lower-emission alternatives and introduces new safety protocols and ongoing technician training requirements. A direct business impact of this regulation has been a shift in customer demand towards repairing existing units rather than replacing them with new units given costs. Given repairs are less lucrative, this presents business risk. Increased training costs, lost productivity during training, and potential labor shortages for qualified technicians are added risks from the new regulations. The Company also faces potential stranded inventory if R-410A refrigerants or systems become unsellable.

On the other hand, compliance with SB 261, SB 253, and AIM Act refrigerant rules enhances the Company’s credibility with regulators, lenders, and customers. Management believes the Company can position itself as compliance-ready for customers who seek long-term system reliability. In the medium to longer team, refrigerant changes may ultimately stimulate more replacements as repair costs rise or customers adjust to higher equipment prices, though the timing remains uncertain.

Technology

Ongoing costs will be required for technician certification, equipment, and safety procedures associated with A2L refrigerants required under the EPA AIM Act. The Company completed supplier consolidation for HVAC systems in 2023, which has improved procurement efficiency and reduced exposure to OEM scarcity and price volatility. Growth in high-efficiency, low-GWP HVAC systems is expected to drive future sales once customer adoption increases.

Fleet electrification, refrigerant transitions, and other compliance obligations require significant upfront capital investments that may constrain cash flow or impact other priorities such as growth initiatives. Lenders and insurers increasingly integrate climate risk into underwriting, which may result in higher borrowing costs or premiums.

Targeted investments such as EV fleet adoption and energy-efficient facilities can reduce the Company’s long-term operating costs. Management believes that maintaining strong compliance and transparent climate-related reporting practices can improve access to capital and protect against higher financing and insurance costs.

Market

Changing customer preferences for sustainable and energy-efficient products could potentially present opportunities for the Company to expand product and service offerings. The Company’s positioning as a trusted provider of sustainable and compliance-ready solutions can strengthen both residential and commercial customer relationships, but management recognizes that it remains critical to continue meeting customer sustainability requirements in order to maintain strong commercial account relationships.

Impact on Business, Strategy, and Financial Planning

The Company has begun to evaluate the impact of climate-related risks and opportunities on its overall strategy and financial planning, though this work is still in the early stages and primarily focused on short-term compliance drivers. The most significant physical factor consistently considered by management is increased heat, which is expected to be a key driver of performance by intensifying customer demand for HVAC repairs, replacements, and system upgrades.

While climate-related risks and opportunities are not yet fully embedded into long-term strategic or financial planning, management recognizes that regulatory compliance and heat-related demand patterns are already shaping near-term revenue, margins, and investment priorities. Climate-related risks and opportunities influence currently affect the Company’s operations and financial planning primarily through compliance and demand management. Emerging market factors and regulatory requirements are shaping procurement, technician training, and pricing strategies, as well as driving capital expenditures for fleet and equipment. Supplier consolidation has streamlined decision-making, enhanced purchasing leverage, and reduced exposure to OEM scarcity, while enabling the Company to adapt more rapidly to low-GWP refrigerant transitions. Operationally, the Company has invested in workforce training and short-term demand forecasting, using two-week weather projections to anticipate and manage heat-driven workload surges—an increasingly important factor expected to influence performance going forward.

Resilience of Strategy

Mitigation of Transition Risks

The Company has implemented several measures to mitigate transition risks, including transitioning HVAC product offerings to align with the EPA AIM Act refrigerant requirements, consolidating suppliers to streamline procurement, investing in technician training for A2L refrigerants, initiating fleet electrification in California to comply with emissions mandates, and incorporating short-term weather forecasting into operations to better manage market demand during heat events. These initiatives are coordinated within existing operational structures and budgets under management oversight.

Business Continuity and Physical Resilience

The Company does not currently maintain a formal, written business continuity plan specific to climate-related physical risks. However, inherent mitigation capabilities are built into the Company’s operating model, which provides for flexibility and resilience during extreme weather or other disruptive events.

Given the Company’s geographic dispersion, operations are not overly reliant on any single location, which reduces exposure to localized disruptions. The Company’s scale and structure enable management to shift resources quickly as needed - such as reallocating vehicles across regions, drawing on OEM supplier relationships to secure replacement inventory, or mobilizing technicians from nearby locations to support affected markets.

These capabilities allow the Company to respond rapidly to post-storm conditions and other climate-related disruptions. While the current approach is reactive rather than based on a formal continuity framework, this operational flexibility helps ensure continued access to critical supplies, labor, and fleet capacity, supporting essential services even without a dedicated, climate-specific continuity policy in place.

Scenario Analysis and Contingency Planning

The Company has not yet conducted formal climate scenario analysis, quantitative stress testing, or contingency planning to evaluate the resilience of its strategy under varying climate scenarios beyond the physical risk analysis previously discussed. At present, management remains primarily focused on short-term (18–24 month) compliance-related impacts and continues to operate in a largely reactive capacity, responding to evolving regulatory and operational requirements as they arise.

2. Risk Management

Identifying and Assessing Climate Risks

The Company’s process for identifying and assessing climate-related risks is anchored in an ESG consulting report completed in 2023, which provided the first structured review of the need to identify potential exposures. This report has guided the Company’s understanding of climate-related issues over the past several years. Since that time, the focus has remained primarily on compliance-driven transition risks, particularly those associated with regulatory requirements such as SB 261 and SB 253.

The Company evaluates these risks through a cross-functional approach led by the Finance, Legal, and Operations teams, with an emphasis on ensuring regulatory compliance. Management has identified the opportunity to establish a formal disaster recovery and business continuity policy to address climate-related physical risks; however, this recommendation has not yet been prioritized at the enterprise level. As a result, current processes emphasize short-term compliance and operational readiness rather than long-term scenario analysis or formal continuity planning.

To evaluate significance, the Company considers factors such as regulatory compliance, operational impact, and financial materiality. Risks are assessed based on whether compliance is legally required (including SB 261, SB 253, the EPA AIM Act refrigerant phase-down, and California Air Resources Board fleet standards), whether such risks could disrupt operations (for example, fleet availability, technician safety, or HVAC equipment supply), and whether customer demand patterns—particularly heat-driven surges in HVAC repair and replacement—could materially affect revenue and margins. These factors are evaluated through established processes within the Finance, Legal, and Operations functions, and significant issues are escalated to the Chief Executive Officer and the Board of Directors’ Audit Committee, as appropriate.

Risk Management Processes

Once identified, the Company manages climate-related risks primarily through mitigation and control strategies embedded within existing operational processes. These activities include ensuring compliance with applicable regulatory requirements, monitoring supply chain readiness for refrigerant transitions, and managing workforce safety during periods of extreme heat or severe weather events.

The Company’s climate-related risk management remains closely aligned with regulatory compliance and operational continuity. Current processes are designed to ensure adherence to emerging legal and regulatory obligations while maintaining consistent service reliability across the Company and its subsidiaries.

Integration with Overall Risk Management

Climate-related risks have not yet been fully integrated into the Company’s enterprise risk management framework. At present, these risks are addressed within existing compliance and operational processes on an as-needed basis rather than through formal inclusion in enterprise risk registers or organization-wide risk reviews.

3. Metrics & Targets

Metrics

The Company will begin measuring and reporting greenhouse gas (GHG) emissions to comply with California SB 253, which requires disclosure of emissions, if and when the law goes into effect.

Currently, the Company’s focus remains on ensuring regulatory readiness rather than establishing broader enterprise-wide emissions reduction commitments. As part of ongoing compliance preparations, the Company will utilize data collected through platforms such as Persefoni to measure and report greenhouse gas emissions across its operations and vehicle fleet.

Targets

Current efforts remain focused on compliance with climate disclosure regulations. Given this focus on foundational compliance activities, the Company has not yet established specific climate-related targets.

CAUTIONARY STATEMENT

NO PRESUMPTION OF MATERIALITY

This report has been prepared in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) to comply with California’s SB 261. It is intended to provide information regarding potential climate-related financial risks that the company may face. The risks and statements described herein are based on current knowledge, assumptions, and available data as of the date of publication.

Nothing in this document is intended to imply, nor should it be construed to indicate, that any specific risk or statement discussed is financially material to the company. The identification or discussion of any particular risk does not constitute an admission or representation regarding its materiality, probability, or potential impact under applicable securities laws or accounting standards. Readers are cautioned not to place undue reliance on forward-looking statements or scenario analyses, which are subject to inherent uncertainties.

The company undertakes no obligation to update any information contained in this report except as required by law.