How Do Green Buildings Improve Business?

A white paper by Schneider Electric on why being green and socially responsible from the very beginning of construction and facility management really matters.

- Melissa O’mara and Shan Bates

Beyond moral and ethical considerations, there are tangible economic reasons why sustainable building practices are a good investment for the future. For one thing, payback improves as energy prices rise, so energy efficiency improvements become a better investment all the time.

Recent analysis shows that the Return on Investment (ROI) for green buildings is higher in both new construction and existing building projects, as compared to standard construction. Measuring, monitoring, and automating a building’s energy systems maximises this high ROI by ensuring equipment is only in use when needed and that all operations are at peak efficiency and effectiveness. ROI improvements reported by owners of green projects in the US were 9.9 per cent on new construction and 19.2 percent existing building projects. This ROI is not surprising. There is strong evidence that green buildings positively affect capital expenses (CapEx) as well as Operating Expenses (OpEx).

For example:

Operating costs decrease 13.6 per cent for new construction and 8.5 per cent for existing building projects

Occupancy increases 6.4 percent for new construction and 2.5 per cent for existing building projects

Rent increases 6.1 per cent in new construction and one per cent in existing building projects

Companies incorporating sustainability perform better

Annual reports are overflowing with the words “green” and “sustainable,” but does corporate social responsibility really matter to the bottom line? The answer is “yes”. Global 500 companies demonstrating leadership in carbon disclosure or carbon performance yielded twice the average return as the index as a whole. Studies also show a significantly negative impact on productivity and return on equity for abandoning corporate social responsibility standards.