J500 Media and the Environment


What is in LEED for me?… Money! by alejandrooj840
October 18, 2008, 2:32 pm
Filed under: Design + Architecture, Society + Media | Tags: , , ,

Is there a business case for sustainable buildings? Do “green” buildings cost more? That depends on how the answer is framed (knowing your audience). But if your goal is to obtain buy-in, the business/ROI angle can be clear and effective way to get your message across.

The USGBC calculates that most buildings have an average lifespan between 50 and 100 years. This bit of data is important because under current market standards, construction costs represent less than 1% of building costs over a 100-year operational model.

On the call I had mentioned the Packard Foundation as a great source of information related to the true cost of sustainability. They released a report in 2002 that looks at first costs and compares them to overall costs over a 30, 60 and 100 year period. The results showed that while there was a higher initial cost for sustainable buildings, one could expect small returns as quickly as in 30 years, with significant savings at the 60 and 100 year marks.

This is where the issue of framing and knowing your audience becomes important, because as one begins to craft a message the focus must be kept on long term savings. This message can be especially effective if your audience is business managers and building operators. Anecdotally, I have noticed that “executive-types” tend to be more concerned with capital costs and it is imperative to understand their threshold for long returns when creating a message that appeals to them. To that effect, the charts created by the Packard foundation are an excellent tool to help reframe the conversation on the issues that create a sustainable environment and help save the company money.

This conversation is also particularly interesting in light of the assigned readings. Yes, the USGBC acts as shield to protect building sustainability claims against greenwashing, but that is not the point I wanted to make. With all of the discussion and the documentaries and advertising about how green buildings make fiscal sense; triple bottom line studies like the Packard Foundation’s are not as widespread as you may expect. It is immensely easier to obtain “marketing-type” material about green buildings than it is to find data that is actually useful to make a business case. Ultimately my criticism is that although entities must speak in easy terms in order to connect they must also be able to back what they say with factual information and make this data easily accessible. This will become the basis on which audiences will become more educated and ultimately the best catalyst for change.

On a side note:

While I agree with the notion that even small things can help. Dunkin Donuts could go through the steps to streamline their coffee production and reduce the waste in their disposable cups. But buildings are a very large ticket item when it comes to the environment: They account for 72% of our electricity (which comes from coal), 38% of all CO2 and 30% of all waste. So, while that may not be part of the main “mission” for someone like DD (unlike coffee); it is a great place to try to generate change.

Alex O.

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6 Comments so far
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Thanks for the info additional on ROI for green buildings and sustainable design investments. While I think it is great that many governmental agencies are requiring sustainable design and LEED on projects, it is tougher to “sell” that to private clients, especially publicly traded companies that are frequently more concerned about next quarter’s financial performance than getting a return in the possibly distant future on a current investment

Comment by shawng

Alex, you raise interesting points. I echo Shawn’s sentiments. You say, “one could expect small returns as quickly as in 30 years.” For a company and shareholders conditioned on quarterly returns, that ROI horizon seems very long. What do you suggest to get buy-in from institutions that need to demonstrate ROI in under a decade?
Simran

Comment by j500

I also mimic Shawn and Simran in that 30 years is more than a few lifetimes of a company. Corporate executives are almost always rewarded for short-term results, and I read recently that the average shelf life of a CEO and/or CMO is three years. It’s unfortunate that in our economy and corporate culture that our leaders tend to be so short-sighted, but I’d love to see examples of some plans that have been developed and implemented to achieve the long-term vision you speak of. Those would make for a great business case and example to follow going forward.

Comment by matthewj77

I think that you are speaking of a very real concern that the green movement faces; not only in buildings, but in all areas including energy, domestic products and habit change. I believe that from a capital and business standpoint, green will have a higher first cost for the foreseeable future. Purely on those terms, I believe there is no positive answer to the question of “Will I get a return in under 10 years?”.
I feel that asking for a 10-year return on green buildings makes no more sense than asking for a return on recycling, or switching from bleach to a non-chlorine based cleaner.
The lining here is that unlike those 2 other examples, there is a pure-business case to be made on green building. The key to that message is to be up front about first cost implications and to quickly move on to lower operations costs and the possibilities of additional or enhanced revenues out of the current marketing power of “green”.

Alex O.

Comment by alejandrooj840

I thought a bit more about some of these comments. Perhaps a different course of action would be to speak of only cost neutral options to green building. There are a few “points” that can be achieved such as using only low VOC paints and coatings; and using high albedo roofing materials. While these are not the least expensive option available, they are cost neutral compared to other “good-practice” materials. The only downside then is not cost, but quantity of options.

Alex O.

Comment by alejandrooj840

Short-term gains will whet their appetites and pave the way for getting buy-in for larger projects.
Nice evolution in your thinking!
Simran

Comment by j500




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