EBA Journal: Summer 2023 Edition

EBA JOURNAL

Summer 2023 | Volume 8, Issue 2

Envisioning the Future

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These documents and resources are provided solely to members of the Environmental Bankers Association, Inc. (EBA) for informational purposes only. EBA members are authorized to use these materials for internal reference or training purposes, but are not authorized to disseminate or publish any portion of the document to non-EBA members or the general public without prior written consent from EBA. Non-EBA members are not authorized to use these materials for any purpose without the prior written approval of the EBA. Neither the EBA, nor any of its directors, officers, employees or agents, nor any of the Authors makes any representations or warranties, express or implied, or assumes any legal liability for the completeness, reliability, timeliness, currency, accuracy or usefulness of the information provided herein, or for the applicability of the information provided herein to the facts and circumstances particular to any specific use, including but not limited to information found through any links or references to resources, case studies, projects and/or services referred to within these resources.

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Any action taken based upon the information provided in or through these documents and resources is done so strictly at your own risk. Neither the EBA nor any of the Authors shall be liable for any damages of any nature incurred as a result of or in connection with the use of this information. These materials and the information herein do not constitute legal or other professional advice or opinion. It is recommended that you seek appropriate legal or other professional advice to determine whether any advice, actions or practices referenced within these resources is appropriate or legally correct in your jurisdiction.

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Summer Edition

Volume 8, Issue 2, July 2023

EDITOR/ COMMITTEE CHAIR

Ruxandra Niculescu

COMMITTEE

Lizz Barringer Lagomarsino

Victor DeTroy

Brenna Houston

Tina Huff

Elizabeth Krol

Holly Neber

Mike Nesteroff

Rita Wiggin

2023 BOARD OF GOVERNORS

President David Lambert, Wells Fargo

Vice President

John Rybak, Truist Bank

Governor/ Membership Committee Chair

Onamia Chun

Zions Bancorporation

Governor/

Risk Management Committee Chair

Caitlin Lozano, Rockland Trust

Governor/

Technical Content Committee Chair

Georgina Dannatt, Bank of the West/ BMO Harris

Affiliate Governor

Scott Davis, ERIS

Treasurer Mary Clare Maxwell, Chase Bank

Governor/ Conference Committee Chair

Rita Wiggin, First Bank

Governor Jennifer Bellamy, US Bank

Affiliate Governor Sean Leary, GZA

21-23 25-29 31-42

Progress on the United Nations Commitment to End Plastic Pollution

PFAS Corner: Get ahead: including PFAS in environmental due diligence

AI in Technical

Report Writing:

Evolution, Not Replacement

Welcome to EBA A Message from

the President

INVESTING IN EBA’S FUTURE

Welcome to EBA’s 2023 Annual Conference! Get ready for a reimagined experience brought to you by EBA’s dedicated Conference Committee, chaired by Rita Wiggin, and powered by your feedback.

As I mentioned in prior communications, the EBA Board of Governors has been hard at work focusing on strategic objectives to increase membership value. The enhanced conference experience is one outcome of this focus. Today, I am proud to announce we are further investing in EBA’s future by enhancing our educational offerings with a first-of-its-kind Environmental Risk Manager certificate program that will include Continuing Education Units (CEUs) and roll-out in early 2024. We feel this program will be a resource for both banker and affiliate members, help drive new membership, and promote consistent environmental risk management in the industry. Likewise, it will provide a platform for future educational opportunities and set the stage for EBA to become an industry-leading training provider.

EBA President

David Lambert, Wells Fargo Bank

Development of a formal education program has been an idea (and a good one) floating around EBA for years, but the organization has never been in a position to act on it. Thanks to the prior boards’ (under Sharon Valverde’s and Bill Sloan’s presidencies) leadership in building adequate reserves, and to the current board’s vision and courage to act, the EBA is now ready to execute on this exciting transformational challenge.

The board unanimously approved a motion to retain Recovery Risk, headed by Marty Walters, to develop the curriculum and necessary procedures to obtain independent certification of the training program. See Marty’s journal article EBA Levels Up on Professional Development on page 7. Marty will be attending the Annual Conference and presenting an overview of the program during the joint banker-affiliate session. Please do not miss this!

Have a great conference, and as always, please do not hesitate to ask questions or provide feedback to any of the board members. I look forward to seeing everyone!

Meet you in St. Louis,

David Lambert EBA President

EBA Levels Up on Professional Development

Members can start earning certificates in 2024

By Marty Walters

After a lot of work assessing learning needs and setting up our organization to host a certificate program, the Environmental Bankers Association is formally kicking off development in the summer of 2023! I’m very excited about leading this effort for EBA, a unique opportunity that came about after a merger ended my bank position. Like a lot of EBA members, this organization is my career home base, where environmental professionals are seen, heard, and supported. When I come to EBA events, it’s an opportunity to lift the fog of everyday pressures and uphold the professional and ethical standards of our field. Our new certificate program will capture this experience with a formal assessment of knowledge and skills needed to support good decision by bank environmental risk managers and the consultants who support them.

Over the next six months, we’ll be establishing a road map for the risk manager certificate, including:

• Prerequisite Qualifications

• Initial Certificate Training over 3-4 months

• Examination

• Award of Certificate

• Continuing Education

• Trainer Qualifications

• Program Administration

EBA will become accredited by the International Accreditors for Continuing Education and Training (IACET), so that our program content will earn you continuing education credits.

When Dave Lambert took on the role of president for EBA in January 2022, he wrote in this Journal that EBA “will focus on increasing the value to membership by expanding the depth and breadth of educational and professional development opportunities and improving the quality of content.” Past president Bill Sloan promised us that EBA is evolving and acknowledged that our leadership position in the banking industry means we need to continue setting and meeting ambitious goals. Through the challenges of the pandemic and economic conditions in recent years, Bill handed off leadership of an organization that’s more resilient than ever. Dave has taken that organization to new levels of smart governance, transparency, and equity.

Over the next few months, we’ll be developing all the elements for the Certificate Program through our committees. Consider joining one of these wonderful committees to get involved. Contact me at marty.walters@recoveryrisk.com your questions and get guidance on how to best support the program.

Why Banks Need Certified Environmental Risk Managers

• Bridge from information gathering to risk mitigation and ultimate credit decisions

• Create deep bench of environmental risk professionals within consulting and bank organizations

• Integrated risk management that works for institutional needsoutsourced or internal, technical or non-technical

• Adaptability to changing supervisory and regulatory environment

• Responsive to investor, customer, employee, and community reinvestment concerns

• Data and reporting consistency, accuracy, usefulness in enterprise risk management

Why Environmental Professionals Need the EBA Certificate

• Unify professionals across the spectrum

o Large bank risk teams

o Small teams and single practitioners in smaller banks

o Outsourced reviewers

o Technical consultants

o Other experts

• Facilitate transition from technical to financial work environment

• Support transitions from small and big organizations

• Develop career pathways within traditional environmental risk role

• Leverage risk mitigation skills to tackle other areas of risk like ESG and resiliency, project finance, M&A finance, equipment finance

Gloomy Forecast, With A Few Rays Of Sunshine

By Ruxandra Niculescu, Geographic Services Inc. and Dianne Crocker, Lighbox

I recently attended a Broker’s Mid-Year Update in Sacramento, CA. Everyone was in high spirits, chatting and having an overall good time. That is, until the panelists took the stage. As we were presented with updates from five brokers representing the the office, investment, industrial, multi-family, and retail sectors, a cloud seemed to fall over the entire audience.

Despite one broker’s upbeat sentiment as she described her wish-list for the return to office, it was clear that even she did not practice being in the office five days a week. There was much discussion of converting office space to mixed use, with some commenting that science and laboratory uses were much needed in the area, while others advocated for multi-family residential conversions, despite the cost associated with such an endeavor.

From the investment perspective, it was like everyone had hit a pause button and was waiting to see what happens next. No one was willing to make the first move. Investors, who had spent 10 million on a property, are not willing to sell for eight. The problem here, being that if they continue to hold the property, there’s a very real possibility that next year the same property will be worth seven million or less. Add to this the fact that construction costs have gone up (though in some areas prices have started to fall), and we have an overall bleak outlook.

Despite this, the industrial sector appeared to be doing well, with one panelist saying development had continued and prices on space had gone up. In many areas developers saw industrial space rivaling big box store and former office space square footage prices. While this seemed positive, the speaker made a point to say he was cautious of being too optimistic as many of their projects would close out by February 2024 with no new projects slated for construction on the horizon. This was echoed by the multi-family residential broker, who lamented the lack of tenants willing to pay the current market rates. Reportedly, property owners have been reducing rates in an effort to attract qualified tenants, with minimal results.

Following the disheartening speech, the speaker for retail assets commented that he rarely liked presenting after multi-family residential, because his assets rarely performed as well. Today, was an exception, and he asked if his fellow panelist wanted a hug. This lightened the mood in the room, and the final speaker said that despite obvious changes, like Bed, Bath & Beyond moving out of some locations, they’ve already had many of the vacancies filled with newer operations seeking space for conversion to other uses. He seemed almost embarrassed to report that they had seen little change in rent and leases and were actually struggling to find space for some of their prospective clients.

While Sacramento is a small microcosm of the nation as a whole, many of these sentiments are felt across the country. Incidentally, at the same time the panel of brokers was presenting their Mid-Year Update, a group of individuals was brought together by LightBox to present the Sentiment Survey Report discussing expectations for the market in the 2nd half of 2023. The report looked at the complex market conditions through the lens of commercial real estate lending, brokers, investment, appraisal, and environmental due diligence sectors.

A few of the results from the discussion are outlined below:

• Recessionary concerns, pricing uncertainty, and the wave of loan maturities over the next 18 months are the top-of-mind concerns. Adding to the uncertainty. Is the stillrising interest rate environment, and the unknowns about where rates will ultimately land. The expectation is Powell is going to announce another few hikes this year after hitting the brakes at the June meeting.

• Deals are difficult to complete right now (we’re seeing declines of 30-40% year over year across selling, appraisal, environmental due diligence notwithstanding differences by geography and asset class). Buying, selling, and refinancing related activity is down 30-40% across geographies and asset classes. The report data suggests we’ve seen the bottom, a U-shaped recovery, with early signs that activity is picking up.

• Capital flows are subdued, and property valuations are in flux. The market is bracing for a wave of nearly $900 billion in loan maturities over the next two years for which refinancing may prove difficult, especially in the office and retail sectors.

• The bank failures of the first half of the year sparked even greater caution so lending will likely be more constrained and certainly more cautious. Scrutiny on lenders’ risk exposure is intense and some banks are already actively planning to divest some commercial real estate loans to reduce risk, redeploy capital, and drop potentially distressed assets.

• In terms of outlook, there are a lot of unknowns so not surprising that the survey responses about the forecast were notably a mixed bag. Only one in five respondents was bullish about the second half of 2023, while most respondents (48%) were neutral.

• It is clear the stage is set for a challenging second half. There is excitement and cause for concern, with potential for opportunities and distress ahead. Capital will be poised to jump on new opportunities, and the banking system remains fundamentally strong, which should help contain any fallout from recent bank failures.

As the second half of the year takes shape, market barometers to watch include:

• Whether the Fed resumes modest rate increases at its July and September Federal Open Market Committee (FOMC) meetings.

• Whether sellers make price concessions to narrow the bid-ask gap which thwarted deals in the first half of 2023.

• When/whether loan defaults tick up as loans maturing in the higher interest rate environment.

• How property fundamentals change by asset class/metro as vacancy rates increase, rent growth decelerates and prices reset.

• How companies’ decisions about office usage translate into demand for office properties and decisions about property reuse.

The results of the annual Sentiment Survey reflect that the stage is set for a challenging second half of 2023. Myriad concerns about a possible recession, constrained debt capital, price uncertainty, future interest rate hikes and a spike in distressed assets are casting a shadow of uncertainty over the market forecast. However, survey respondents are poised to shift to new areas of opportunity as they emerge. Despite the bleak outlook one may feel in the depth of winter, spring does eventually come, and Economists have referred to the term “green shoots” to signify small signs of recovery and growth from the ashes of a downturn. There is excitement and cause for concern; there will be opportunities and there will be distress; and there will be pain and there will be green shoots. These contrasts will unfold against a backdrop of a banking system that remains fundamentally strong.

Until the market finds a new equilibrium, investors’ and lenders’ underwriting should reflect the growing caution in the market, and assumptions should be tested under various scenarios to ensure prudent decision-making appropriate for today’s uncertain investment climate. Environmental consultants stand ready to assess properties for environmental rate, and increasingly, climate risk exposure, particularly flood and wildfire. In this time of transition, the commercial real estate market is entering a new phase of the cycle as it adjusts to higher interest rates, shifting demands for space, the coming wave of distress and intense pressures on market participants to close deals quickly.

Dianne Crocker is the Principal Analyst at Lightbox, a leading technology provider of due diligence, risk management, location intelligence and workflow solutions to consultants, lenders, appraisers, brokers and other stakeholders in CRE transactions. She is a highly respected expert on commercial real estate market trends and forecasting; property due diligence and risk management; and technology trends. With more than 20 years’ experience in the commercial real estate industry, she has analyzed the market through three cyclical downturns. Globe St. Real Estate Forum recently recognized Dianne among their 2022 Women of Influence based on career achievements, community outreach and mentorship within the industry. She was also selected by Connect Media as one of ten national winners of the 2020 Women in Real Estate Awards, which honors the achievements and inspirational stories of women who have reached respected positions of leadership and play key mentorship roles for others. She is also a cofounder of the Developing Leader mentoring program, now in its third year of connecting young environmental professionals in the consulting and lending sectors with veteran mentors.

Dianne is a passionate member of CREW Boston, currently serving as her chapter’s Delegate to the global organization, CREW Network, and as a member of CREW Network’s Industry Research Committee.

Ruxandra Niculescu is the Chief Executive Officer of Geographic Services Inc. (GSI), a WOSB that provides a variety of services in environmental consulting and remediation. With over 20 years of experience in the industry, she enjoys providing insight on how to navigate the regulatory landscape and find solutions to complex problems. Ruxandra has held talks and presentations on the due diligence process for a wide audience of lenders, brokers, and other interested parties, both in California and New Jersey. Locally, Ruxandra is also involved in various organizations including the Sacramento Association for Commercial Real Estate, CREW-Sacramento, and the American River Parkway Foundation.

New Bank Supervisory Guidance Brings Together Standards for Bank Vendors

By Marty Walters, Recovery Risk

June 20, 2023. Sacramento, California. One interesting aspect of bank mergers and acquisitions happens during an integration, when two banks merge their policies and procedures to create one consolidated entity. It is especially interesting when you are the acquired bank, and you get a chance to see how different organizations work from the ground up. When my New York bank employer was acquired by a bank in North Carolina, one of the first big changes I encountered was the way my new employer handled vendors, known in the banking world as third-party relationships. I came from a world of extensive vendor risk evaluations and negotiations of master service agreements that could take 6 months, and my new bank simply maintained a list of approved consultants.

Why? It took me a whole year to understand how banks develop their programs for managing vendors and what is changing in the new interagency guidance issued in June 2023. The guidance is issued jointly by the Federal Reserve, FDIC, OCC, and NCUA, and one of the first things to understand is that these different bank regulators set standards and oversee different kinds of financial institutions.

Federal Regulator Oversees These Financial Institutions

Federal Reserve Bank holding companies Office of the Comptroller of the Currency (OCC)

Nationally-chartered banks

Nationally-chartered savings and loans

U.S. branches of foreign banks

Federal Deposit Insurance Corporation (FDIC)

National Credit Union Administration (NCUA)

State-chartered banks insured by FDIC

State-chartered savings and loans insured by FDIC

Credit unions

Each of these regulators previously issued their own guidance on how financial institutions should manage the risks associated with their third-party relationships for vendors, but the jointly issued a proposal in 2021 and then the final guidance in 2023 to unify these separate standards.

For any environmental risk manager, managing vendor relationships with engineering and environmental firms is a big part of our job. We want to make sure that we have a range of firms that can work on all the different types of projects that come up during due diligence and portfolio management. In addition, some banks use the same vendors to help with purchasing and leasing their bank offices and branches. My previous vendor program also included goals for contracting work to small and disadvantaged firms.

Under the new guidance program, each financial institution will evaluate risks with third party and vendor relationships, such as engineering and environmental firms, to assess how they work with the bank and what kinds of information they use or generate. The amount of money contracted to third parties is also an important element of evaluating risk. Based on that risk evaluation, vendors are classified according to the potential risk their work carries with respect to the bank’s ability to do business and protect sensitive financial and personal information.

In my experience, engineering and environmental firms used in due diligence activities are usually ranked as a low risk by banks, and the amount of review and oversight is at the low end of the spectrum. That can still be a lot of work for vendors, who often must respond to questionnaires and provide information about their scope of work, their subcontractors, and their data security measures in order to do work for banks. In recent years, the biggest focus in my vendor management programs has been on how information is exchanged between the bank and the engineering firm, how the engineering firm uses and stores that data, and whether data considered to be personal information or sensitive is then protected by the engineering firm.

The new guidance goes into effect as of June 2023 and will drive more consistency across the financial services industry. Engineering and environmental firms should be able to develop standardized packages to submit for review to all their current and prospective bank customers. All financial institutions will be expected to have a comprehensive list of vendors, to rank them according to the risk posed from their services, have executed contracts or master services agreements, to independently evaluate performance, and properly close out relationships that are no longer appropriate or serving the bank’s needs. For state-chartered banks and smaller institutions, this may involve more robust vendor risk evaluation programs and more robust oversight and accountability of vendors.

The guidance mentions diversity policies and practices in directing banks to integrate third party management into its broader strategies and goals, but the degree of work and cost involved in meeting all the requirements (even for low-risk vendors) will exclude some small firms owned by minorities, veterans, and other under-represented groups unless they get up to speed on the standards laid out in the third-party relationship guidance. You can find the interagency guidance in the Federal Register for June 9, 2023, cited as 88 FR 37920.

Marty Walters is a 20-year bank environmental and engineering risk veteran who has recently returned to consulting, specializing in managing risks that occur during the recovery period after significant climate, hazardous materials, and economic losses.

In February 2022, at the resumed fifth session of the United Nations Environment Assembly (UNEA-5.2), a historic resolution (5/14) was adopted to develop a binding agreement to address plastic pollution, including in the marine environment, before 2024. For the first time, the international community agreed on a framework to curb the world’s growing plastic problem. This framework involved creation of an Intergovernmental Negotiating Committee (INC) to hash out details of a treaty by the end of 2024. INC’s mandate includes all phases of the plastic life cycle from design and production to waste management.

Since then, INC has met twice, first in Uruguay from November 28 to December 2, 2022 and most recently in Paris from May 29 to June 2, 2023. At the first meeting, the focus was largely on accepting stakeholder feedback and establishing procedures for respectful dialogue, including how to continue to solicit feedback throughout the process. Hundreds of stakeholders participated in addition to member country representatives. Discussion revolved around the the structure of the proposed agreement, with no definitive format resulting from the first session. Two conflicting approaches emerged. One was modeled after the Montreal Protocol, the multilateral environmental agreement that phased down the production and consumption of ozone depleting substances (ODS) in relatively prescriptive steps. The other approach followed the Paris Agreement which allowed each nation to determine for itself how best to tackle climate change and reduce its greenhouse gas emissions through non-mandatory (voluntary) nationally determined contributions.

The second session began with continued discussion about process and procedure, and hearing from stakeholders. Approximately 1,700 people attended including approximately 700 representatives of 169 member states (countries) as well as other interested parties organized in groups known as civil societies. At first it seemed negotiations would be bogged down by process. Environmentalists claimed the plastic producers and producing countries were stalling discussion with conflicts arising about the role of plastic recycling, among other things. However, by the end of the session the parties had agreed that the INC Chair, with the support of the U.N. Secretariat, would prepare a zero draft of the agreement for discussion ahead of the next session, due to take place in Nairobi, Kenya, in November 2023. Reportedly, during closed-door negotiations a majority of countries agreed that the treaty should be global and legally binding, rather than voluntary. In addition, approximately half of the country representatives agreed that some especially harmful polymers, chemicals and plastic products, which might include intentionally added per- and polyfluoroalkyl substances (PFAS), should be banned or phased out.

As stated by Inger Andersen,

Executive Director

of the UN Environment Programme (UNEP):

I look forward to INC-3 in Nairobi, and urge Member States to maintain this momentum. The world is calling for an agreement that is broad, innovative, inclusive and transparent, one that leans on science and learns from stakeholders, and one that ensures support for developing nations.

Stakeholders are invited to submit written positions by August 15, 2023 with member country statements due by September 15, 2023. Intersessional work to develop the zero draft will be critical for achieving the stated timeline. Reconciling the myriad positions will be challenging under any circumstances, but the timeline adds urgency to the work. Given the global impact, the U.N. goal of eliminating plastic pollution is ambitious but worth watching. Stay tuned.

PFAS CORNER

Get ahead: including PFAS in environmental due diligence

By Eric Wood and Elizabeth Krol, Ramboll

Instead of waiting for USEPA to add PFAS to the hazardous substances list, lenders and equity investors for commercial real estate should consider addressing them in Phase I ESAs now. Eric Wood and Liz Krol explain why.

July 2023

Considering liability, pre acquisition

Questions surrounding long-term liability are top-of-mind pre-acquisition, when considering taking title to a property and becoming part of the chain of ownership. Commercial real estate investors should be cognizant of the need to consider emerging contaminants, especially per- and polyfluoroalkyl substances (PFAS).

Concerns regarding emerging contaminants have become increasingly heightened as the prevalence and persistence of PFAS become better understood. Although the United States Environmental Protection Agency (USEPA) has yet to add emerging contaminants to the hazardous substances list, 28 states are further ahead with regulatory thresholds, while others are still in development.

With near-constant press coverage and increasing global regulatory scrutiny, those involved in commercial real estate transactions are asking – how could PFAS affect us, and what do we need to do about it?

ASTM E1527-21 and the AAI standard

Effective February 13, 2023, the USEPA adopted ASTM E1527-21 to meet the All Appropriate Inquiries (AAI) standard (AAI standard; 40 CFR Part 312). The current ASTM E1527-21 Phase I Environmental Site Assessment standard sets a higher bar for what is deemed “good commercial and customary practice” in environmental due diligence.

As part of the due diligence process, environmental professionals seek to identify recognized environmental conditions (RECs) associated with the subject property. The scope of work includes data gathering and drawing conclusions regarding RECs in order to meet the requirements of AAI under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, or Superfund).

Why consider emerging contaminants in due diligence now?

The purpose of the Phase I ESA process is to seek an understanding of current and historical operations or conditions at the subject and adjoining properties, specifically including industrial operations that may include use of petroleum products and hazardous substances, to identify RECs.

While nearly 30 states in the US currently have guidance and/or regulatory thresholds established pertaining to certain PFAS, the environmental community is awaiting an announcement from USEPA pertaining to the addition of two PFAS to the CERCLA hazardous substances list (PFOS and PFOA). Maximum contaminant levels (MCLs) are also proposed by USEPA in this proposed regulation to establish the maximum level allowed in water delivered to any user of a public water system (PWS). For the assessment of industrial properties in particular, increased attention should be considered for the potential presence of emerging contaminants, including PFAS.

While consideration of emerging contaminants like PFAS is referenced in the current Phase I ESA standard in the non-scope considerations, they have the potential to be identified in state agency database searches for jurisdictions that have established regulations or guidance pertaining to emerging contaminants. Some clients may be interested in including an assessment of PFOA and PFOS (the PFAS that are currently proposed for listing as CERCLA hazardous substances).

How environmental consultants can help

The presence or potential presence of PFAS brings unique challenges to transactions. Along with counsel, environmental consultants are key in a number of ways. Skillful consultants will:

1. Know where and when and why to look: PFAS are often easily overlooked.

2. How to search historical information.

3. Use a science-based approach in forming conceptual site models (CSMs) to inform potential risks and liabilities that may not be inherently obvious.

4. Take an experienced, balanced approach to findings, without unnecessary alarm.

5. Coordinate with counsel, especially in sensitive situations.

6. Account for background considerations and other sources of PFAS.

7. Estimate the risks and liabilities when PFAS are involved.

8. Advise if a Phase II investigation is necessary.

9. Use Operational Assessments (often through counsel) to identify risks and liabilities.

10. Be sensitive to differing objectives whether buying, selling, or divesting.

Looking ahead

Those considering a new acquisition, investment, or leasehold, particularly with a property that may have had industrial or manufacturing operations on site currently or historically, should work closely with their trusted environmental counsel and environmental consultant to develop an approach to due diligence when seeking to limit liability and understand the uncertainty surrounding emerging contaminants such as PFAS.

The regulatory landscape is constantly changing, and due diligence presents an opportunity to reduce uncertainty and decrease risk.

Ramboll is proud to be a new affiliate member of the EBA! Please look out for a company spotlight feature in the upcoming Winter 2024

and Eric Wood are both Principals in Ramboll’s Westford, New England

Beyond support with due diligence, Ramboll provides additional technical and advisory support services for PFAS and other emerging contaminants, including investigation, remediation, forensics analysis, expert litigation support including cost recovery and cost allocation, drinking water and wastewater treatment, air quality, and health sciences.

www.ramboll.com/pfas

AI in Technical Report Writing: Evolution, Not Replacement

By Luis Villegas, Quire

Welcome to the fascinating world of artificial intelligence (AI), where technology is increasingly engaging with tasks traditionally reserved for human intellect. Our focus for this article is on the realm of Natural Language Processing (NLP) and Natural Language Generation (NLG), aspects of AI that deal with understanding and creating human-like text. These advancements are transforming various fields, including technical report writing.

At the heart of our discussion is ChatGPT, an AI model developed by OpenAI, designed to generate text that closely resembles human writing. This tool has begun to make significant waves across many industries, showing promise of disrupting the way businesses communicate and create content. Yet, it's important to note that, while powerful, this tool still requires careful handling for optimal results.

But let's tackle the looming question: Will AI replace us? We want to assure you that the goal of AI isn't to replace us, but to augment our abilities. AI tools like NLP and NLG are becoming more integrated in various industries, shifting the focus to higher-value tasks and improving the overall quality of work.

In this FAQ-style article, we'll explore the capabilities and implications of AI in technical report writing, with a particular focus on ChatGPT. Our aim is to provide a comprehensive understanding of the topic and foster meaningful discussions about the future of our industry. We believe that AI, when used as a tool for augmentation rather than replacement, has the potential to revolutionize technical report writing and elevate the quality of our work. So, let’s dive into the questions that matter to us all!

What is ChatGPT and why is it relevant to technical report writing?

ChatGPT is an AI tool developed by OpenAI. It's part of a larger family of models known as GPT, which stands for "Generative Pretrained Transformer." The model is designed to generate human-like text based on the input it's given. You can think of it as an advanced version of auto-complete: you provide a prompt, and ChatGPT generates the rest.

The relevance of ChatGPT to the technical report writing market is multifaceted:

Efficiency: ChatGPT can draft reports, summarize complex data, and generate coherent text quickly, which can save time for technical writers.

Consistency: AI doesn't get tired or lose focus, so it can maintain a consistent level of output and quality, especially for repetitive tasks.

Scalability: AI can handle large volumes of work, providing scalability that human teams may struggle to match.

Augmentation: Perhaps most importantly, ChatGPT is a tool for augmentation. It can enhance the capabilities of human writers by taking over mundane and repetitive aspects of writing, freeing up time for more complex and creative tasks.

However, it's important to note that ChatGPT is not a perfect writer and doesn't fully understand the context in the way humans do. It requires supervision and editing from humans to ensure the quality and accuracy of the output. This is why we consider AI as an augmentation tool rather than a replacement for human writers.

What is ChatGPT and why is it relevant to technical report writing?

Artificial Intelligence, exemplified by tools like ChatGPT, holds promising potential to transform technical report writing. As a digital consultant, ChatGPT can streamline the drafting process by suggesting improvements in clarity, structure, and appropriate terminology. This augments a writer's skillset, while retaining their creative control.

Simultaneously, AI can automate mundane tasks, freeing writers to focus on strategic decision-making, thereby leading to more insightful reports. It's about harnessing the human-AI synergy to enhance the value of the human element in technical writing. In terms of capabilities, ChatGPT can draft emails, write

How does AI affect the job market for technical report writers? Will AI replace human writers?

Fears about AI replacing jobs, especially in technical report writing, are natural. Yet, it’s important to understand that tools like ChatGPT are not designed to eliminate human involvement but rather to support and enhance it.

AI's impact on the job market is less about displacement and more about shifting roles. AI can take on certain tasks, sure, but it doesn't possess the creativity, subjectivity, and complex understanding that humans bring to their work. Its role is to assist, to make tasks quicker and easier, not to replace the people performing them.

Moreover, the use of AI in technical report writing can actually create new opportunities. With AI handling some parts of the process, writers could have more time to deepen their expertise, engage in research, or innovate in their writing styles and techniques.

In sum, AI like ChatGPT is a tool to be leveraged. It's not a replacement for human writers but a co-worker, helping to streamline the writing process and free up time for other valuable activities. The future of technical report writing with AI is not a zero-sum game it’s a partnership.

How does the quality of AI-generated writing compare with human writing?

While AI tools like ChatGPT have made significant advancements in generating human-like text, there's still a noticeable gap when compared to the depth and richness of human writing. ChatGPT, despite being trained on enormous datasets, can occasionally struggle to fully comprehend the intricate nuances inherent in specialized fields like technical writing. It can produce outputs that are coherent and grammatically correct, yet may lack the precise accuracy and relevance required in technical documents. This necessitates a layer of human editing and refinement to ensure the output meets high-quality standards. However, it's important to note that AI-generated writing is continually improving, and as AI models become more sophisticated, we can expect a closer approximation to human writing quality.

How can AI help improve the quality of human writing?

AI tools like ChatGPT can be instrumental in improving the quality of human writing, especially in technical fields. These tools can serve as invaluable aids, offering suggestions for enhanced clarity, structural improvements, and appropriate terminology usage. The real-time feedback and guidance provided by AI can help writers refine their work and elevate their writing skills. Additionally, AI tools can assist in overcoming common challenges such as writer's block by generating ideas and providing new perspectives on topics. The potential of AI-generated writing lies in its capacity to augment human expertise, creating a potent combination that can significantly enhance the overall quality of technical reports.

How can AI address the challenge of finding good technical writers?

Finding skilled technical writers is a well-known hurdle in our field. AI, particularly tools like ChatGPT, offer intriguing solutions to help bridge this talent gap. While AI cannot supplant the human expertise a proficient writer brings, it can help by laying a foundation of quality writing, acting as a supportive tool for both budding and experienced professionals.

For newer entrants in the field, AI can act as a training device, offering suggestions and enhancements that improve their writing over time. On the other hand, experienced professionals, particularly those with exceptional technical and investigative skills but who struggle with communicating their findings in professional business documents, can also benefit from AI. It can assist in translating their rich technical knowledge into a well-articulated report, thereby bolstering their communication skills and making them more well-rounded professionals.

Furthermore, AI can introduce a level of standardization across a team, ensuring a consistent level of fluency and technical precision. While AI may not completely resolve the challenge of finding skilled technical writers, it certainly contributes significantly to addressing this issue, enhancing the skills of professionals across the spectrum of experience.

Why focus on ChatGPT instead of other AI technologies?

Our focus on ChatGPT is due to its broad applicability, particularly in tasks requiring natural language processing, such as customer service, technical support, and personal assistance. ChatGPT has garnered an active user base of over 100 million, demonstrating its wide acceptance and utility. While it does have limitations, such as potential inaccuracies in complex queries, it has proven to be particularly useful in dialog and text generation tasks . One notable constraint is that its training data only extends up to 2021, which may influence the context or relevance of its responses in certain instances.

On the other hand, Bing AI, developed by Microsoft, excels in search-related tasks and has unique features such as image search functionality. It can answer questions and execute tasks, but its conversational abilities are not as sophisticated as those of ChatGPT. Thus, while Bing AI is excellent for searching and organizing information, it may not be as adept at generating human-like text.

In short, while other AI models like Bing AI have their strengths, ChatGPT's versatility and human-like text generation capabilities make it particularly relevant for the technical report writing market.

What are the privacy considerations when using AI, specifically ChatGPT?

In the AI realm, particularly with tools like ChatGPT, privacy considerations remain paramount and are a topic of ongoing discussions. OpenAI, the developer of ChatGPT, has enacted some measures to address some of these concerns.

ChatGPT recently acquired a "history disabled" feature. This function ensures specific discussions aren't utilized in training future AI models. According to the OpenAI data policy, these conversations are stored briefly on OpenAI's servers for necessary safety measures and are removed after 30 days - leaving no long-term digital echo.

Additionally, OpenAI is developing a business-oriented subscription for ChatGPT. This subscription, tailored for organizations needing a stronger grip on their data, ensures by default that user data isn't used for model training.

These are promising steps towards protecting sensitive information, but they don’t take the place of due diligence and being aware of any tool’s policies. In essence, while we harness ChatGPT's power to augment technical report writing, we mustn't lose sight of privacy. It's about navigating the AI waters responsibly.

As a consultant, how can you effectively use ChatGPT?

As an environmental consultant, ChatGPT can be a valuable ally. It can assist in drafting environmental impact assessments, policy briefs, or compliance reports, enabling you to concentrate on strategic aspects of your work.

ChatGPT can generate ideas, provide varied perspectives on environmental issues, and offer content suggestions, thereby enhancing your analytical process.

Moreover, it can serve as an ondemand research tool, providing summaries of complex environmental concepts or policy developments.

However, careful usage is vital. It's always essential to cross-check the information generated by ChatGPT for accuracy, given its limitation in occasionally producing incorrect outputs. For sensitive discussions, employ the 'history disabled' feature to maintain privacy.

Ultimately, ChatGPT isn't a replacement for your expertise, but rather a powerful supplement that, used judiciously, can enhance your consulting efficiency and effectiveness.

How should one begin when starting to use ChatGPT?

Starting with ChatGPT is a straightforward process:

1. Visit the website: Access the tool by visiting https://chat.openai.com.

2. Sign Up/Log In: If you're new to the platform, create an account. If you already have one, simply log in.

3. Explore: Familiarize yourself with the interface. You'll find a dialogue box where you can type in your prompts.

4. Start a Conversation: Enter a simple prompt to get a feel of how ChatGPT responds.

5. Experiment: Try out different kinds of prompts. Remember, the more specific you are, the better the tool can cater to your request.

6. Learn: Get to know the settings and features, like the 'history disabled' option for privacy.

Could you provide a relevant example and some tips on how ChatGPT can be used in technical report writing?

ChatGPT can be used to draft preliminary reports, saving time for human reviewers and consultants. For instance, consider this prompt:

"Summarize the relevant environmental regulations and compliance requirements for a new construction project on a 20-acre wetland property in the Southeastern United States.”

Given this prompt, ChatGPT will provide an overview of the regulations and requirements, which may include the Clean Water Act's Section 404 permitting, statelevel protections, and EPA guidelines for wetlands. Remember, while AI-generated content is highly useful as a starting point, all AI-produced summaries should be verified by an expert to ensure accuracy and completeness. Furthermore, as AI doesn't replace the need for professional judgment, any interpretations or recommendations should be handled by experienced consultants. Also, it’s essential to understand that its training data only extends up to 2021.

Now, let's delve into some tips for effective usage of ChatGPT in technical report writing:

1. Be Specific: Context is everything. The more specific your prompt, the more focused the output. Including key details in your prompts will guide the model to generate relevant and useful content.

2. Review and Edit: Always review the AI-generated content for accuracy and appropriateness. While ChatGPT can produce impressive results, it can sometimes get things wrong or miss nuances.

3. Experiment: Don’t hesitate to experiment with different types of prompts and see what works best. You might find certain phrasing or instructions yield better results.

4. Use Iteratively: You don't need to use AI for an entire document at once. Use it section by section, refining as you go. ChatGPT is conversational, meaning you can continue building and refining an output by simply asking questions.

Remember, AI is here to assist you, acting as a co-author rather than a solo writer. It’s about making your work easier and more efficient.

Conclusion

How can we summarize the role of AI in technical report writing?

ChatGPT presents exciting potential as a tool for enhancing efficiency and accuracy within the technical report writing field. However, it is crucial not to view these technologies as a replacement but rather as an augmentation to human expertise. The integration of Artificial Intelligence into existing workflows allows individuals to allocate more time for higher-level tasks while enabling machines to handle repetitive jobs like proofreading. This collaborative approach can lead to better accuracy overall, resulting in increased productivity levels and high-quality reports.

By embracing AI's potential to complement human capabilities rather than replace them, professionals in the technical report writing market can harness the benefits of this technology while mitigating its challenges. As we look ahead, the future of AI in technical report writing lies in striking a balance between leveraging cutting-edge technology and preserving the value of human insight, ultimately leading to a more efficient and effective industry.

AUTHOR FOOTNOTE:

Although ChatGPT didn't generate the article, it was used to proofread and format the structure of the article.

Below is an example how ChatGPT was used in the construction the following paragraph:

ORIGINAL:

AI, like ChatGPT, has great prospects in changing the way we do technical report writing. The tool is like a digital advisor, which can help make the drafting process smoother. It does this by providing suggestions for clearer writing, better organization, and right terms. The tool is designed to complement a writer's skills but still allows them to maintain their creativity.

CHATGBT RECOMMENDED:

Artificial Intelligence, exemplified by tools like ChatGPT, holds promising potential to transform technical report writing. As a digital consultant, ChatGPT can streamline the drafting process by suggesting improvements in clarity, structure, and appropriate terminology. This augments a writer's skillset, while retaining their creative control.

Luis Villegas, currently serving as the Manager of Software Development at Quire, brings over a decade of experience in professional software development to his role. In his tenure with Quire, the leading technical report writing platform provider, Luis' most notable achievements include the creation of Quire's data warehouse and the establishment of its data analytics services. A seasoned explorer of cutting-edge technologies, Luis's research and interest span areas such as Artificial Intelligence and Big Data Analytics, with these interests informing and enriching Quire's technological offerings.

CLIMATE RISK ASSESSMENT

Instantly know property risks due to climate change

Appendix A: Recommended Resources

In this appendix, we provide a selection of resources that can help you get the most out of your experience with ChatGPT.

Official Documentation and Guides

Risk of precipitation

STORM DROUGHT

Risk of water scarcity

• OpenAI’s Documentation: OpenAI provides comprehensive documentation on the use of ChatGPT. It is a rich source of technical information and is an excellent starting point. OpenAI GPT Best Practices

Guides and Tutorials

Risk of extreme heat

HEAT FIRE

Risk of wildfire

FLOOD

Risk of inland and coastal flooding

ERIS can provide in-depth property speci c reports outlining risks over time to all the hazards, a full search within property boundaries and geographic comparisons.

Connect with us:

info@erisinfo.com erisinfo.com/climaterisk

• ChatGPT Cheat Sheet: “This cheat sheet illustrates the diverse abilities of OpenAI’s ChatGPT for developers and content creators to enhance their proficiency in large language models prompting across various domains including media content creation, natural language processing, and programming”. Cheat Sheet PDF

• Prompt Engineering Guide: “Motivated by the high interest in developing with LLMs, we have created this new prompt engineering guide that contains all the latest papers, learning guides, models, lectures, references, new LLM capabilities, and tools related to prompt engineering.” Prompt Guide

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