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The time is now for green buildings
Corporate environmental sustainability initiatives are more valuable and necessary today than ever before. There are five major reasons for this: compelling evidence of human-induced climate change; escalating costs of energy; imminent regulation and controls on greenhouse gas emissions; stakeholder-driven environmental reporting mandates; and the positive returns that make environmental sustainability a sound business practice.
The first reason, clear and compelling evidence of global climate change, is driving corporations and federal agencies to reduce greenhouse gas emissions by at least 50 percent over the next 30 years. To achieve that goal, they must take action now. The evidence of global climate change includes documented record increases in numbers of major weather-related disasters and wildfires, receding polar ice caps and a rise of ocean levels that threatens vast populations and current coastal landmasses. The most definitive report on global warming to date, the 2007 scientific Synthesis Report by the United Nations Intergovernmental Panel on Climate Change, warned that “reductions in greenhouse gasses had to start immediately to avert a global climate disaster.” It cites the probabilities of major low-lying coastal inundations from rises in sea level, widespread drought and desertification, and the loss of up to 70 percent of all species on the planet today.
The second reason impacts public organizations and corporations right at the bottom line: operational costs. Energy prices have reached record levels (see Fig. 1) and only continue to escalate due to the increased demand of an expanded global economy. Energy prices, especially oil prices, have surpassed peak levels such as those during the energy crisis of the 1970s, but energy economists warn that after 2015, the global supplies of gas and oil will be insufficient to keep up with demand—a trend projected to drive up energy prices with adverse impacts on an organization’s operating costs.
Third, mandated caps on carbon dioxide emissions are now a matter of when, not “if,” and will continue to drive the cost of nonrenewable energy higher, not lower. Each of the major party candidates in the 2008 presidential election campaign have proposed aggressive policies to reduce emissions by corporations and public organizations, and the U.S. Senate is poised to vote on a 70 percent cut in carbon emissions with interim goals set for 2020 (Senate Bill S.2191, also known as the Lieberman-Warner Climate Security Act).
The fourth reason is that investors are pressuring the world’s largest companies to disclose carbon emissions. In 2003, 300 institutional investors formed the Carbon Disclosure Project to compel the largest companies from the Fortune 500 to disclose their carbon emissions as a factor of their revenue and EBITDA. In 2007, more than one third of the Fortune 500 reported their carbon emissions, and revenue to carbon emissions is becoming a fundamental valuation criterion for investors.
The fifth, and perhaps most compelling reason, is simply this: environmental sustainability makes good business sense. Corporations, such as GE, Johnson & Johnson, IBM, Wal-Mart and Nike have achieved tremendous returns on their investments in green strategies that reduce carbon dioxide emissions. Many companies yield lifecycle savings of as much as ten times the initial investment.
Buildings generate nearly half of all greenhouse gas emissions
For most corporations and federal agencies, buildings are the biggest emitter of greenhouse gases and represent the best opportunity to cost-effectively reduce environmental impact and achieve sustainability (see Fig. 2). In fact, the U.S. Energy Information Administration and the United States Green Building Council (USGBC) each report that buildings are responsible for 39 percent of carbon dioxide emissions and 71 percent of commercial electricity consumption. Investments in green building strategies consistently result in significant benefits for organizations today. Green buildings not only reduce the environmental impacts of natural resource consumption and green house gas emissions, they also provide economical benefits such as reduced costs, improved bottom-line performance and higher shareholder value. Green buildings also enhance occupant comfort and health and improve worker productivity, which in turn improves financial performance. The net result is that organizations reduce costs as much as $1.00 per square foot of building space and can increase revenue by up to $10.00 per square foot based on improved worker productivity.
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