At the recent Urban Land Institute Spring Conference in Charlotte, NC, I joined 3,300 real estate executives from all parts of the U.S. to share information, learn and network. Of course there was the usual smattering of ”green” sessions, including a moving keynote presentation by Amory Lovins, founder of the Rocky Mountain Institute. Regrettably, Amory’s session was not well attended, perhaps due to the early morning hour.
Even more disturbing, however, was the casual conversation I had later that night with an attendee who is responsible for the real estate investments of a public pension fund. After the initial pleasantries I asked him if they had any policies for investing in “green” buildings. “No,” he said, explaining that any such policy would be a breach of their fiduciary responsibility to maximize the value of their investments. Furthermore, he added, he simply couldn’t justify asking the bus drivers and janitors whose pensions were his responsibility to safeguard, to make due with less so that they could invest in green. Unfortunately he was not interested in continuing the conversation. More unfortunate is that he is not alone in his flawed thinking.
Flawed Thinking Is Holding Us Back
The assumption that a policy that supports investing in green buildings will lead to lower returns and jeopardize the pensions that are funded by those investments is flawed. In fact, everything points to the contrary: energy and water efficient buildings with healthier indoor environments are more valuable than their more traditional “twins” and more desirable to owners, tenants, investors and lenders.
The flawed thinking described above is shared by many of my real estate colleagues and is one of the key challenges to greening the built environment. Although no one will admit to wanting to own, occupy, lease, invest in or lend to leaky, inefficient, obsolete buildings, many are candid that the benefits of investments to transform these buildings into sustainable, efficient assets have not been sufficiently established to motivate them to take action. Thus only a tiny percentage of the 125 million buildings in the U.S. can be considered green, a reality which is illustrated by the fact that 15 years after the “birth” of the green building movement, only 35,000 buildings in the U.S. — .03% of the total — have earned the Leadership in Energy and Environmental Design certification.
What’s Needed To Reach the Tipping Point
Here’s what we think is needed to reach the tipping point for greening the built environment:
- better data about the results of green initiatives, including cost/benefit, payback period and ROI analyses
- education that incorporates the social science of behavior modification so we can engage everyone in the food chain to do things differently
- transparency on the part of those who are out ahead of the pack on lessons learned and best practices, and platforms to make this information readily available
- consistent federal, state and local regulatory policy that encourages, incentivizes and, where appropriate, mandates green building practices, features and initiatives
- and of course, increased demand by end users.
Let us know what YOU think about all of this. Your opinions, thoughts and suggestions are welcomed. And, let us help you take advantage of the greatest business opportunity of our time — sustainability — for breakthrough business results.
As winter transitions to spring, the news is full of stories about record high temperatures throughout the United States. In Europe, it’s been a winter of record lows. These possible indications of climate change prompted us at Green Edge to focus our sustainability lens on risk management. We believe that the ramifications of climate change — or global weirding — are unavoidable and must be managed. To those who fail to do so, beware!