A Call To Action: Buildings Key to Corporate Sustainability

September 9, 2008

George Ahn
President & CEO
TRIRIGA

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While it seems that more companies label themselves “green” every day, the fact is, most corporations have only a vague idea of how they can make a demonstrable improvement in environmental performance. This is particularly alarming given a number of factors, including imminent governmental regulations and commitments to greenhouse gas reductions (e.g. the Lieberman-Warner Climate Security Act); executive and board-level pledges to customers, shareholders and investors; and rising energy prices and operating costs. This confluence of multiple drivers is escalating the urgency of the need for corporate sustainability and the pressures on businesses to respond.

While 55% of organizations have set policies to reduce their environmental impact, those responsible for achieving sustainability goals lack a clear path to success, according to The Economist. Wouldn’t it be great if the answer to environmental sustainability were right in front of us? As it turns out, for those of us who work in an office every day, it is. Right before your eyes is THE number one environmental culprit: the buildings that house businesses around the world. According to the U.S. Energy Information Administration and the US Green Buildings Council (USGBC), buildings account for a staggering forty-eight percent (48%) of total energy consumption and greenhouse gas emissions.

Buildings contribute directly to global warming through direct environmental impacts such as greenhouse gas emissions, as well as in indirect ways, for instance the energy consumed to heat, light and make buildings functional. The Energy Information Administration and USGBC further report that buildings are responsible for thirty-nine percent (39%) of carbon dioxide emissions and seventy-one percent (71%) of electricity consumption.

Admittedly, there is no single magic key ending to our planet’s woes. While initiatives like clean coal and nuclear power have the potential to provide real return, that value is sometimes decades down the road. In contrast, buildings – both new and existing – represent the low-hanging fruit of corporate sustainability. If we want to make a difference today, real estate assets provide the yellow brick road to green: the fastest path to a reduced environmental impact. Further, as the graph below shows, not only do buildings clearly top other factors like transportation and manufacturing in environmental implications, buildings impact is also accelerating at a higher rate.

Buildings represent the most accessible, immediate and impactful opportunity to improve corporate sustainability, and they also provide a significant opportunity for revenue potential and expense reduction to make a true “triple bottom line” difference. The triple bottom line expands the view of an organization’s performance to include impacts on people and the planet in addition to profit. Sustainable buildings address each aspect of definition of success through decreased in environmental impact and increased operational efficiency, worker productivity, revenue and shareholder value.

For example, over a twenty-year period, a typical company with $1 billion in revenue and 5 million square feet of real estate assets stands to gain $250 in savings from energy, emissions, water, operations and maintenance of the buildings, not to mention increased productivity and real estate health value. Further, according to Dr. Joseph Romm of the Center for Energy and Climate Solutions, the benefits of green building improvements include reduced operating costs by an average of $1 per square foot and increased revenue by $10 per square foot from improved worker productivity.

So how do we take action? Like the sticky alliterative “reduce, reuse, recycle” our children learn in school, “measure, manage, reduce” must become the mantra of executives, board members, and all those with a stake in corporate sustainability. A recent ad hoc survey of more than thirty percent (30%) of the Fortune 500 companies revealed eighty-six percent (86%) of those surveyed could not say definitively what their carbon footprint was. As the old adage goes, “you can’t manage what you can’t measure.” Once we have reliable ways to measure our impact on the environment, making a difference doesn’t seem like such an overwhelming charge because pinpointing opportunities for improvement becomes easier and allows us to focus on action.

It is absolutely imperative that we recognize not only the enormity of the harm buildings cause, but also the significance of the opportunity for improvement. Leading U.S. government and NGO sources agree that buildings are the largest environmental culprit and are therefore the first place an organization should start if they want to reduce their overall carbon footprint, improve sustainability, and reduce energy costs.

George Ahn is the president and CEO of TRIRIGA Inc., a provider of integrated workplace management solutions.

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Reader Comments

Mr. Ahn makes a valid point regarding the impact of buildings on the environment but it is not the root cause of the problem. It is a significant contributing factor.

I find it interesting that there is continued growing focus on green buildings as a major solution to our environmental and capacity problems when stepping back to an earlier point in the decision-making process creates significantly greater financial, environmental, and performance benefits.

This shift in focus allows a company to investigate and leverage workplace alternatives which would defer or eliminate the need to build in the first place. Additional benefits from this approach include better recruiting and retention, lower capital and operating expenses, smaller environmental footprint, better performance, and new branding opportunities.

Traditional workplace strategies focused on 1:1 desk ratios and immobility create an under-utilization of our workspace and general work-life imbalance. Several independents studies, including one that I supported, measured space utilization of assigned office space finding occupancy levels as low as 25% – 30%. This means that a typical office building is upwards of 75% vacant making them significantly underutilized assets that generate a sizeable environmental liability.

Driving down a building’s environmental footprint is very important. But first, we should be determining if “that” green building or space needed to be built in the first place since an unnecessary building, regardless of its greenness, is not good for the environment.

George Gosieski | September 10th, 2008

I’ve always wondered why big buildings never turned off their lights during the night. I’m glad to see this is starting to change, they are one of the biggest wasters of energy and it is important to get them in line. Turn things off when not in use – how hard is that?

Green Sustainability Advocate | September 11th, 2008

Thank you both for the comments. George G. – I wholeheartedly agree! A non-existent building is much more environmentally friendly than any “green” building. Unfortunately, over 5 billion square feet of office stock is added annually in the United States, and another 5 billion is renovated each year (according to Architecture 2030). With this in mind, it’s important to consider the full lifecycle of real estate and make improvements every step of the way. As you point out, the initial step involves improving space utilization and mobility programs to reduce the need for new buildings in the first place. When we do have to construct new spaces, the second key stage of the lifecycle comes into play: using green building techniques to construct energy – efficient new buildings that use renewable energy sources. Finally, to accelerate the overall reduction of buildings’ impact, the last part of the lifecycle involves improving and greening existing buildings by implementing retrofits to make buildings more energy efficient and use renewable energy sources. We’re at a point of transformation, in that people and companies increasingly recognize the value of improving sustainability, but because the shift to a greener world has barely just begun, we must capitalize on every opportunity and address all aspects of the factors – such as buildings – that impact the environment.

George Ahn | September 16th, 2008