More and more corporations are embracing sustainability as a profitable and socially responsible strategy. In 2006, for example, 39 of the Fortune 100 issued Sustainability Reports. Companies reap many financial benefits from sustainability, particularly greater competitiveness in today’s global marketplace. First, sustainability opens up substantial opportunities for new products, technologies, and services in many markets.
Second, a company’s sustainable (or “green”) workplaces lower its overhead costs, increase its employee productivity, reduce its absenteeism and health care costs, and strengthen its employee attraction and retention. Castcon Stone, Inc., for example, saw productivity rise 25 percent in its new green Precast Concrete Manufacturing Facility in Saxonburg, Pa., compared to its previous (non-green) facility. At Lend Lease’s new green Sydney, Australia headquarters, the work force’s health problems (including fatigue) decreased an average of 23 percent compared to the previous headquarters building, while productivity jumped by 51 percent.
Third, companies can take advantage of the branding opportunities that come with sustainability, which improves both community goodwill and market share.
“Companies are choosing socially responsible strategies, like sustainability in their workplaces and operations, not from nobility, but because it benefits them,” says Peter J. Miscovich, a Partner at Deloitte Consulting in New York City. “A socially responsible image attracts skilled, educated workers in an increasingly tight labor market. It also differentiates a company from its competitors, which attracts more customers.”
Of increasing importance, more and more cities and states are no longer giving companies a choice: They are mandating corporate sustainability. In December 2006, for example, both Boston and Washington, D.C. enacted regulations requiring that privately-owned new buildings and renovation projects over 50,000 sq. ft. (4,645 sq. m.) meet the U.S. Green Building Council’s LEED-Certification standards.
The Federal Government may soon enact measures that require greater corporate sustainability. Newly introduced legislation in the House of Representatives and Senate, for example, seek greater energy efficiency and reduced greenhouse gas emissions.
Around the world, more and more nations are now requiring greater corporate sustainability by mandating greater energy efficiency, enhanced recycling programs, and reduced greenhouse gas emissions in most workplaces. The European Union’s Directive on Energy Performance of Buildings, for example, established minimum energy performance requirements for new buildings and major renovations.
Now, more than ever before, companies that want to compete effectively must become much more sustainable in their workplaces, their day-to-day operations, their products and technologies, and in their business and supplier relationships.
Corporate real estate: a Pivotal role
At many companies, corporate real estate (CRE) departments are already leading the way toward sustainability, and their companies are reaping the benefits. According to Sanford Smith, Corporate Manager for Toyota USA’s Real Estate Facilities, Toyota Logistics Services’ 85-acre (35-hectare) LEED-Gold Vehicle Distribution Center in Portland, Ore., designed by TransSystems/MNB Architects has reduced energy consumption and costs by 33 percent compared to its previous facility, and it has cut potable water consumption and costs by 77 percent. The new Vehicle Distribution Center also emits 63 percent (1.9 million pounds/861,825 kilograms) less carbon dioxide (a greenhouse gas) than the previous facility.
Bank of America is basking in the “green halo effect,” which has given the company significant branding opportunities that no amount of paid advertising could buy. The corporation’s under-construction 52-story, 2.1-million sq.-ft. (195,095-sq.-m.) LEED-Platinum Bank of America Tower in Manhattan (a joint venture with the Durst Organization that is scheduled for completion in 2008) has already unleashed a flood of favorable articles in magazines and newspapers, television coverage, and a parade of “How We Did It” presentations at professional conferences.
A Corporate real estate action Plan
When a company sees the many benefits derived from a new or renovated green workplace, it is much more likely to adopt sustainable practices and policies in other business endeavors. Here are some of the ways the CRE department can lead its company to the many benefits of a broad-based sustainability program.
First, get the education and training you need in green planning and development. When it comes to sustainable workplaces, knowledge is both vital and powerful. Many organizations, from CoreNet Global to the U.S. Green Building Council, offer classes, workshops, and training on sustainable development and renovations. The Internet is also an invaluable source of information and on-line training.
Make the CRE department the company’s green expert. Put your key staff through the USGBC’s LEED Accredited Professional program, which gives real estate professionals a thorough understanding of green building practices, principles, and resources and the skills to guide projects through the LEED planning and certification process.
Second, analyze your company’s real estate portfolio through the lens of your green knowledge and training. Determine what renovations or tenant improvements are needed to make each workplace — from white collar offices to blue collar manufacturing plants and distribution facilities — more sustainable. Expand this analysis to include the new workplaces your company is planning to construct or lease.
Third, rethink your planning and design process for new facilities. Rather than assigning isolated tasks to project team members both within and outside the CRE department, implement a collaborative green planning and design process. According to Dan Heinfeld, President of LPA Architects (which designed Toyota Motor Sales’ LEED-Gold North American Headquarters expansion in Torrance, Calif.), a green construction project or renovation stays within the project budget and achieves the expected benefits when it begins with a collaborative green project team examining the site, exterior, interior, and budget together before preparing the first plan. Thus, the team can manage up front the critical interplay of each green component with the rest of the building and how each planning decision impacts the overall project and budget.
A key component of this process is performing a Lifecycle Cost Analysis on every planned or existing building component. Installing a green (landscaped) roof, for example, costs more upfront than a standard or even a light-color reflective Energy Star roof. But it also lasts up to twice as long as a standard roof, requires less maintenance, and provides many more benefits including heat island mitigation (which reduces air conditioner use and energy costs), greater insulation (which reduces HVAC use and energy costs), and storm-water mitigation which helps the facility meet municipal and state building codes and regulations.
Fourth, use the electric grid less and rely on renewable energy more. Renewable energy is sustainable and much less polluting than relying on an energy grid that derives its electricity from fossil fuel and other greenhouse gas-emitting sources.
Advances in renewable energy — including photovoltaic systems, wind turbines, natural gas fuel cells, and bio-fuel and co-generation plants which are now produced by some of the world’s largest corporations — are coming at a fast and furious pace, making these technologies both more convenient and less expensive. Many local, state, and Federal programs also provide incentives, such as rebate programs and tax credits, to companies that install renewable energy and energy-conservation technologies, further lowering the upfront cost of these systems.
In 2006, Wal-Mart announced that it would convert all of its operations — more than 4,300 facilities in 10 countries, including the U.S. — to renewable energy in the coming years. This trend-setting mega-retailer has already put out bids for solar panel installations at its stores and distribution centers in five states.
Fifth, use planning and design to significantly reduce your company’s energy consumption. Whether it’s an existing building or a new facility, installing large windows, clerestories, skylights, daylight monitors, atriums, and other features will help bring natural daylight into the building interior, which reduces artificial lighting use. Office lighting can comprise 25 percent of a building’s energy use.
Low-E glazing on the windows will reduce interior heat gain and glare, which lowers air conditioner use. Installing sunscreens over windows on a building’s southern and western facades will also reduce interior solar heat gain and glare. Light-sensitive and motion-detector lighting sensors and controls reduce energy use, as do individual climate controls which also increase employee satisfaction and productivity.
Natural ventilation reduces HVAC use and energy costs. The 41-story, 822,363-sq.-ft. (76,400-sq.-m.) Swiss Re Tower in London, for example, is 50 percent more energy efficient than a comparably-sized standard office tower, and it has 40 percent fewer carbon dioxide emissions, due in large part to its natural ventilation system — a combination of the glazed ventilated double curtain wall and wind chimneys that pull warm air out of the building in the summer, and use passive solar heating to warm the building in the winter.
The CRE department can also implement a wide variety of exterior planning and design strategies that will further reduce workplace energy consumption. A building’s walls and roof are vast heat islands. Using trees, green screens (metal lattices with vines and flowering plants), arcades, and other strategies to shade the southern and western facades will minimize interior heat gain, which lowers air conditioner use and energy consumption. Installing a light-colored reflective Energy Star roof or green roof will mitigate the rooftop heat island.
Go beyond bricks and Mortar
A CRE department can also go beyond physical workplaces to help green its company. It will already, for example, have chosen vendors that provide sustainable building materials and technologies for new green construction projects and renovations. The department can go further by urging their company to buy sustainable office products, like recycled paper for its printers, copiers, and fax machines. Goldman Sachs, for example, has a corporate-wide recycled paper purchasing program.
The CRE department can also create comprehensive recycling programs that go beyond standard items like paper or plastics. Toyota, for example, recycles 95 percent of the materials used at its Portland Vehicle Distribution Center, including all shipping cartons, waste oil, and fluorescent lamps.
The CRE team must promote the company’s sustainability efforts in-house to gain greater work force buy-in. If the company has a newsletter, publish articles about the financial and health benefits of green buildings, energy-saving tips that any worker can implement, and sustainable policies that have proven successful at other companies.
Be sure to work with the Public Relations and Marketing departments to get mainstream media coverage about the company’s sustainable buildings and current green policies, which will enhance the company’s image and branding. These days, the print, broadcast, and Internet media can’t get enough favorable green news items.
Consistent long-term follow-through
The CRE department should implement a green maintenance program at each of the company’s newly built or renovated facilities. You wouldn’t buy a hybrid car only to overlook periodic service and fail to get the expected fuel economy. The same applies to sustainable workplaces.
The CRE department should conduct annual reviews of each green workplace’s performance that quantitatively analyze — and document — reduced energy and water consumption, and their lower costs, and other factors. Conduct employee surveys to document worker satisfaction, improved productivity, and reductions in always-costly churn.
Looking beyond the building, the CRE department should also verify that other sustainable initiatives like comprehensive recycling or buying products from the right suppliers are still being carried out and are yielding the promised financial benefits.
To reap the broad-based benefits of sustainability for your company, the CRE department must not only help launch these initiatives, it must lead the way with consistent long-term follow-through.
