10 reasons to be green

Sensible Sustainability: 10 reasons to be green

An interview with David Lawrence (MA, MBA, FRICS BREEAM AP, Chairman/Founder RuGBC). By Ksenia Agapova Building green means being sensible. By implementing green standards you can construct a better quality product for the costs of a normal building. Efficient use of resources provides capacity to capture new opportunities and gain momentum. The World Bank`s recent report, states that Russia could earn an additional $84-112 billion in export revenues every year only by reaching its technical energy efficiency potential. This figure is equal to roughly 5 percent of Russia’s 2006 GDP. Only by nurturing population behaviour (switch off the lights and computer when you leave, do not open water taps and leave) we can save 15% of water and energy!

1. Because it makes sense.

Building green means being sensible. By implementing green standards you can construct a better quality product for the costs of a normal building.

A case study of our office park Campus M (Munchen, Germany) can be sited as an example. AIG Lincoln managed to build a BREEAM Excellent rated building without extra costs. How we achieved this? Better insulation, glare, thermal, water and energy control by users, water leak detection, external lightning with daylight sensors, excellent public transport proximity, rainwater is harvesting and extensive landscaping and ecological measures? Pro-active construction site management in order to reduce water, energy and material waste. That`s it. No magic technologies, just common sense applied.

2. You can produce less waste and use saved resources to invest in new opportunities. Why should you waste money using unnecessary energy, or depleting the earth’s natural resources when it can be recycled?

We learned a few lessons from the crisis. First and the most importantly – every resource is limited. Second – it is always possible to make your business more efficient. Building energy efficiency and recycling systems into your assets will help to survive through the bad times and prosper in better economic conditions.

Efficient use of resources provides capacity to capture new opportunities and gain momentum. The World Bank`s recent report, states that Russia could earn an additional $84-112 billion in export revenues every year only by reaching its technical energy efficiency potential. This figure is equal to roughly 5 percent of Russia’s 2006 GDP. Only by nurturing population behaviour (switch off the lights and computer when you leave, do not open water taps and leave) we can save 15% of water and energy!

3. The Triple bottom line: sustainability takes care of People, the Planet and Prosperity

Most of the Western companies harvest benefits of wider approach to their business. Multinationals move from focus on profit and satisfying their owners to addressing their efforts to the whole group of stakeholders involved into the corporation activity. Along with usual accounting reports companies prepare social responsibility and sustainability reports thereby corporations broaden their scope to ecological and social aspects. The holistic approach pays back by workforce commitment, better productivity, risk reduction and improved relations with authorities and reputation. Social responsible and sustainable business reach untapped market potential – by improving efficiency and offering new services. And the most important outcome of this approach is long-term business sustainability. The top Fortune 500 corporates all have Corporate Social Responsibility programmes to improve the health and wellbeing of its employees including reducing energy and carbon.

4. Sustainable design improves the standard of real estate, from cradle to grave.

A vast potential to improve the state of the development cycle lies in implementing green building certification. Better management system, improved material selection and innovation help to produce buildings which would be a better value in five years. When you look at your property – think of its whole lifecycle, notjust next 5 years. This is the way how your future buyer would think of it. Green building standards have a minimum building operational lifecycle of 25 years. By making 0-6% more capital investment now you save millions of future investment.

Green building certifications such as BREEAM are becoming the worldwide accepted standard. Certification will reflect in rent rates and add points to your brand value. Estimated increase of rent rates for green office is 3-8% higher than usual stock of the same grade, increase in value – 7,5 – 8,2%.

5. The biggest saving in sustainable, well designed buildings, is the increase in productivity of the workforce, the biggest cost to any employer.

For certain businesses labour costs reach 80-90% of their operating costs. If we use thr law of big numbers and calculate how much money we spend on our workers sick leave – we receive stunning figures.

For example, the Genzyme Building, a LEED Platimum rated facility in Boston has estimated the following: professional staff average salary of $70,000/annum i.e. a salary bill of $105,000,000.00, if their new LEED Platinum rated building yields them a 2% improvement in staff productivity this equates to $2,100,000.00 savings – i.e. $70.00/m2.

6. Untapped demand for green building

Foreign direct investment and multinational business presence increase in Russia. Foreign businesses require same standard of space they are used in the West. Sustainability criteria are a requirement for such companies as Marks and Spencer, Wal-mart, IKEA, City Bank, Philips, Siemens, Deutsche Bank and many others.

Russian companies will soon follow. For example, Gazprom environmental policy (September 2008) states consideration of environmental factors during the development of a procurement policy. These companies represent a large pool of financially secured and long-term tenants. Estimated occupancy of green buildings increases by 3,5%. Implementing green building standards shows your tenants that you care and they would respond by commitment and loyalty.

7. Sustainability promotes and encourages new innovative technologies, new jobs and renewable sources of energy.

According to the Global Green Building Market report (45 countries, industry professionals) green building is achieving vast market adoption at dramatic rates at every region of the world. 67% of respondent firms confirmed that they are dedicated to green on at least 16% of their projects. Europe currently has the highest level of market activity with over 44% of responding firms building green on over 60% of their projects. By 2013 94% of responding firms will be building green on at least 16% of their projects. All these green project would require professionals in green construction and thus create new workplaces. Research confirms the growth of alternative energy use – solar, wind power, new types of lightning and fuel, and green product use – over 88% of respondents are installing and specifying green products.

8. Governments around the world are using legislation to reduce carbon and energy use in real estate and construction, and to drive ever increasing standards.

New European commitment to reduction of CO2 was accepted in 2009. It is called 20-20-20. That means, that countries of EU committed to reduce CO2 production by 20%, increase renewable by 2020. European environmental legislation is constantly tightening. For example in the UK energy efficiency certificates (EPCs) were accepted as obligatory for commercial real estate in April 2009. And this is not the limit. The legislation continues to develop towards energy efficiency and higher standards.

I will disappoint those who used to say “It doesn`t or won`t affect Russia”. The Government ed to discover amazing potential for economic growth from energy efficiency. The first signal to this is by Dmitriy Medvedev`s policy to improve energy efficiency. On the 23rd October 2009, the Energy Efficiency bill passed it`s second reading. Russia has now officially announced that energy most reduce by 15% by 2020.

9. Institutional investors will seek the most sustainable developments in the future. Entire portfolio’s will become obsolete if not upgraded.

Two main drivers foster this development. First, the concept of corporate sustainability is attractive to investors because it aims to increase long-term shareholder value. Since corporate sustainability performance can now be financially quantified, the sustainability concept is in demand. Second, sustainability leaders are increasingly expected to show superior performance and favourable risk/return profiles. A growing number of investors are convinced that sustainability is a catalyst for enlightened and disciplined management, and, thus, a crucial success factor.

Dow Jones Sustainability Index includes such companies as BMW, Panasonic, Unilever, Nokia, Swiss Re.

10. Real estate and construction make up to 40% of carbon emissions, directly and indirectly. Making buildings more efficient will reduce carbon.

On November 5, 2004, Russia ratified the Kyoto Protocol, and the Protocol came into force in February 2005. The target for Russia is that the country’s combined emissions of Kyoto gases should not exceed five times their combined 1990 levels during the period 2008-2012. This target is generally expressed in annual terms: on average, Russia’s annual emissions of the six Kyoto gases should not exceed their 1990 level over the period 2008-2012. Since 1999, Russia’s economy has grown at a pace of more than 6 percent per year, calling into question whether Russia will stay within the borders set by the Kyoto Protocol for the period beyond 2012.

Carbon in becoming the common measurement for all sustainability efforts, and measurement of ‘carbon footprint’ is essential for all companies and individuals. Carbon trading would come to Russia soon and your portfolio must be prepared. Benchmark sample building will produce 90 kg CO2 emissions per annum, certified building – 60 kg. Carbon efficient projects also can benefit from additional sources of finance – such as EBRD or carbon funds.