ESG and Net Carbon Zero have illuminated markets. This created sustainability rules and investor shifts affecting asset valuation.
This shift has led to investors paying a premium for Green buildings, leaving the Brown buildings at a disadvantage.
Will this continue? Are ESG, Net Carbon Zero just buzzwords? With government legislation growing, pushing for environmental improvements, such as all electric commercial buildings, residential heat pumps, energy efficiency in all assets, this is not going away anytime soon. 28% of carbon emissions globally according to the World Green Building Council, are from operational activities, 11% from materials and construction. Buildings are a BIG target.
Investment strategy has had to change to encompass these initiatives and regulations. Not only are governments requiring greener buildings, but occupants are also.
As we near the SEC ruling on ESG reporting and what that means, everyone is going to want green buildings to keep their reportable numbers low. All of this is driving the change in investment strategy, in new building strategy.
Can an existing building get a Green Certification? The short answer is yes, the long answer is, with time and financial input. Here is the dilemma, pencil the costs of demolition and building new, or renovating to achieve Green Certification. Those costs now have to include the carbon that is being put in the landfill if the choice is to demolish. Cost is no longer the only factor; sustainability is growing larger as a factor.
Buildings with a Green Certification are getting lease rate premiums up to 23%, an 11% occupancy increase, and up to 43% sales price increase. Factor that into the cost of creating a Green Certified building and suddenly we see why the strategy of investors has changed.
All of that being said, let’s be real, a non-Green building in a prime area will still be more valuable than a Breen Building in a non-prime area, it will just take more of an investment to make it green to meet regulations and occupant demands.
So, what are the primary areas to look at to become Sustainable?
Energy Efficiency – The time is now to make a transformative shift in managing our energy consumption. LED lighting, Smart Building Technologies like occupancy sensors and automation will adjust lighting and HVAC to match the occupancy load. Renewable energy sources, efficient motors have a big impact as well.
Water Conservation – Water efficient fixtures, native plantings, recycling water, moisture sensing watering systems all contribute.
Waste Reduction and Recycling – 75% is the estimated amount of waste that is recyclable according to the EPA. Waste segregation, composting, water bottle fill stations…
Indoor Environment Quality – Healthy indoor environment is not just clean air and ventilation, it means choosing finishes that emit less or no VOCs, adding green walls, cleaning with green products, natural light in order to create a sense of well-being.
Sustainable Procurement – Sourcing environmentally friendly products for in house use, and for our production will contribute to sustainability goals. Prioritizing local suppliers to minimize shipping distances and carbon emissions, considering life-cycle assessments of products, and partnering with other Green Vendors encourages others to become green.
Green Certificates and Standards – There are several options available to certify your building, New or Existing:
LEED
BREEAM
Green Globes Certification
WELL
Fitwell
Employee Engagement and Education – This is crucial for a successful implementation of a sustainability program. Workshops, Trainings educate employees on the why, who, value, practicality of the program and will carry over to their private lives. Allowing the employees to drive the initiative, set the goals and priorities fosters a sense of responsibility and collective commitment.
Monitoring, Measuring and Reporting – Know where you are, set KPIs publicize the gains however small they might be, will encourage all to continue with the program. Transparency in the achievements, failures and accountability encourages all to pitch in and make it a reality. Continuous improvement based on data and feedback fosters a sustainability culture and drives advancement of the process.
The determination of a building / company being Green is no longer a subjective analysis, it is fully DATA driven. Green Building Certifications are key, ESG numbers verified and reported, and yes market value and occupancy have become part of the equation. To accomplish this goal, Businesses, Investors need help, someone with a team behind them to truly analyze every aspect of a business /building to put a proper program together and follow it through to the profitable end.