Survey: Sustainable Development on the Rise

CHICAGO-A survey commissioned by Jones Lang LaSalle, based here, has found that companies are more and more adopting sustainability programs. Boston-based CFO Research conducted the questionnaire, which surveyed a total of 175 corporate CFOs and senior finance executives from a variety of industries during the first quarter of the year.

JLL sponsored the survey because “we work very hard to stay in touch with the corporate thinking, because so much of what we do touches corporate CFO’s,” says Lauralee Martin, global COO and CFO at the firm. The majority of respondents said they believe that sustainability programs are more important to management, employees, boards and clients than they were five years ago. “The CFO’s see that the clients of their firms are definitely asking the question” in regards to sustainability, Martin says. “The CFO’s are always in touch with the clients and the revenue source.”However, there is a gap in that companies are still not reporting on their sustainability, such as their carbon dioxide footprint, she says. One of the greatest barriers, respondents said, was the inability to measure the effects on shareholder value, with 46% of respondents indicating it as a barrier, and 37% indicating a barrier as not being able to document the effect of environmental factors on financial performance. Martin says he expects the reporting “will migrate slowly” and that sustainability initiatives “just will become part of business practices.”

Twenty-nine percent of respondents say they believe it is very likely, and an additional 32% believe it is somewhat likely, that their companies will have reduced operating costs if they practice sustainability. About 28% percent believe the company is very likely to have increased customer satisfaction, retention and improved employee productivity, and at least 40% of respondents saying it is somewhat likely the company will receive those benefits.

Increased brand value and improved reputation was seen as a very likely result of sustainability programs by 41% of respondents, with an additional 37% saying it is considered somewhat likely. Still, many respondents said they would take environmental factors into account when making decisions, even if there is not a clear link between the sustainability programs and shareholder value, according to survey results.

Chicago-based John Buck Co. has been developing and managing sustainable buildings for some time, with their office building at 111 S. Wacker being the first LEED gold certified speculative office building in 2005, says CFO Kent Swanson. Recycling is done at buildings they develop and operate, and the company finds ways to reduce energy usage, he says. Swanson, who says he did not participate in the JLL study, said that the financial effects from sustainability “are hard to quantify.” However, there are definite benefits, such as leasing up buildings faster and receiving better lease rates, he says. “We have a greater pool of tenants who are interested in our buildings because of these features,” Swanson says.He says Buck believes that going green is a necessity. More than half of green house emissions come from buildings, Swanson says. “Our industry has a huge opportunity to have an impact,” he says.

Sustainable programs do bring energy cost savings, agrees Martin. “Real estate is a large user of energy.” Through better management of the building and “simple efficiently choices”, there can be financial savings with very little capital outlay, she says. “I think the commercial real estate community will quickly realize they need to be proactive in this space,” she says. Sustainable and “green” buildings “will have more value and buildings will have more appeal to tenants,” Martin says.