Is Sustainability Good Business?

Obviously, for the EPA, whose role is to protect the environment, being in a sustainable building is not only a good idea, but also aligns with the EPA's mission. But how do environmentally sensitive buildings work for general business or real estate owners who have an obligation to earn a profit and return on equity? The latest data shows that facilities that are more green or sustainable are actually better performers. Practices like recycling, green cleaning, energy and water efficiency drive significantly lower operating costs as well as reduce environmental impact. Retailers, like Wal-Mart, are saying green stores drive better sales, and businesses are starting to report that productivity is enhanced in environmentally sensitive buildings. Lower operating costs, better sales and higher productivity are all metrics that any corporate leader can and should support.

So why isn't every business, property owner and operator out making energy efficiency and sustainability improvements? There are two reasons. The first is the energy-efficiency capital myth, which says that the only way to improve efficiency and sustainability is through significant investment. The myth is perpetuated most notably by much of the energy-utility industry's funding mechanisms, which fund energy efficiency primarily through rebate programs on capital equipment replacements – with more limited funding for education, awareness and low or no cost means for improving performance. If capital is the only path to improvement, many do nothing because the pressures to perform financially are high and capital resources are often limited.

The second reason is awareness of alternative means for improving sustainability. The larger, more sophisticated real estate companies and businesses have made huge improvements in terms of both energy efficiency and environmental performance. But these companies still represent a fraction of the business and real estate universe. (For example, the largest real estate firms represent no more than 13% of the total market.)

A recent Commercial Buildings Energy Consumption Survey (sponsored by the Energy Information Administration) of more than 10,000 buildings found that a high percentage of the worst-performing buildings (those buildings operating in the bottom 25% in terms of energy efficiency) have state-of-the-art building technology: 56% have energy-management systems, 45% have variable-speed drives and 73% have economizers.

Similarly, many think only new buildings can perform, while the data showed that an equal number of new and old properties performed poorly. The point is that capital investment in systems and the age of the buildings are not the biggest drivers of performance, particularly relative to energy. Operations and management are.

There is still great waste in our industry. According to the EPA, commercial buildings use about $24 billion worth of energy each year and contribute just under one fifth of US greenhouse emissions. If our industry reduces energy consumption by 10% over the next 10 years, we can reduce our costs by $24 billion in that time. We can also reduce greenhouse gas emissions equal to the exhaust of 15 million cars.

Is 10% savings a realistic goal? According to EPA Energy Star Partner observations, savings of up to 30% are readily achievable through low- and no-cost operational adjustments. And to achieve the goal, effective operations and better management are always good drivers for improved energy as well as environmental performance.

Whether it's for a new building or an existing one, the costs associated with environmental sustainability have come down significantly as architects, engineers, contractors and, increasingly, operators have gained valuable experience in such efforts. If designed properly from the start, a project can have significantly lower environmental impact. If operated properly, with a focus on energy efficiency and environmental performance, the building will yield environmental benefits for its entire life cycle.

When a developer, architect or property manager tells a client a sustainable building will cost a lot more, that client must not have the right developer, architect or property manager. There are many providers who can deliver on this goal without additional total costs, by designing right from the start. A building that is resource efficient will be less, not more, expensive.

Commercial real estate needs to keep investing in the sustainable design, education and awareness that will push our industry toward premium performance, cost and natural resource savings. But it's essential that we not lose sight of the controllable costs that we can tackle today without a large capital investment. In other words, turn off the lights and look more closely at your operations.

There are a variety of sources for more information on environmental sustainability. I suggest, from BOMA, BOMA Energy Efficiency Program and Go Green. Also try: EPA Energy Star Program; US Green Building Council; andGreen Globes.

Brenna Walraven is chair-elect of Washington, DC-based BOMA International. She is also executive director, national property management, USAA Realty Co., which is headquartered in San Antonio. The views expressed in this article are the author's own.