Page 122 - The Green Building Bottom Line The Real Cost of Sustainable Building

GREEN FROM THE INSIDE OUT 101

tion. Assigning a value to the emission or reduction of greenhouse gases makes it a
tangible liability or asset instead of a concept. Many organizations, from Dow
Corning to Bank of America to King County, Washington, participate in the Chicago
Climate Exchange (CCX). The CCX creates a market value for carbon and makes it
a tradable commodity, similar to a stock. Companies that become members and make
carbon reductions realize a market value that can be sold to other companies. The
growing CCX and its membership put a true dollar value on carbon dioxide emis-
sions and reductions. Thus, the externality of carbon dioxide production is either a
financial penalty for emitting companies or an asset for companies that find innova-
tive ways to reduce emissions.
The third benefit is a bit more esoteric, having to do the value creation from new-
to-the-world product and service offerings. First-mover advantage from anticipating a
new need and creating a new carbon-reducing product—for example, a carbon scrub-
ber—can be highly profitable and facilitate a company’s long-term competitive advan-
tage. A consistent message being communicated by business leaders across industry
sectors is not only that a company can do well by doing good, but that energy-efficient
products and services represent a financial windfall to those companies that are early
entrants into this soon-to-be-burgeoning market. 22
Intangible benefits include:

1 Market differentiation.
2 Corporate social responsibility to shareholders.
3 Enhanced employee satisfaction and retention.

Intangible benefits, by definition, are hard to quantify. However, there is true value to
be realized by market differentiation and a commitment to sustainability that orga-
nizations can realize. For example, if there is a choice between a product from Company
A or a product from Company B, but Company B has a program to reduce carbon emis-
sions, an aware consumer will be more apt to purchase the product from Company B. In
a tough, competitive business climate, with consumers five times more apt to think that
a company’s reputation on environmental issues is an important factor in purchasing
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decisions, “environmental compatibility breaks ties at the shelf.” Becoming the first in
your industry to go green provides first-mover advantage—companies that later adopt
such measures will be seen as following the trend of the market leader. Can you assign a
value to this? As we see throughout this book, realizing value from intangible benefits,
particularly brand enhancement and reputation, is tricky. Nevertheless, it certainly earns
an organization its fair share of free publicity through news coverage, demonstrated mar-
ket leadership, and product differentiation. It also facilitates business development as clients
actively seek to associate with a first-mover, values- centric company.
Corporate social responsibility to shareholders relates to the growing awareness of
sustainability in investor decisions. Socially responsible investment (SRI) funds are
growing rapidly, and Dow Jones, among other organizations, has created a Sustain-
ability Index (DJSI) devoted to socially responsible investing. As shareholders increas-
ingly hold organizations accountable for their GHG emissions and environmental