Page 144 - The Green Building Bottom Line The Real Cost of Sustainable Building

GREEN IS THE COLOR OF MONEY 123

of Green, Inc., which has a total asset base of $100 million, this would mean that it
would have reduced liability risk of $50,000 annually ($100 million × 0.5% ÷ 10).
There is one other aspect of exposure to risk that, while possibly remote, has given
us pause. We typically think of our sustainable ethos as one that reduces our exposure
to regulatory censure and litigation. And to a large extent, I think that is correct. But
what about the case where a company’s sustainable ethos actually increases exposure
to risk? This is certainly a possibility when it comes to the way in which a company
markets its green credentials: should a company’s talk exceed actual performance, it
could face costly repercussions. Words to the sustainably oriented: under-promise,
over-deliver, and document all performance claims. The sustainability movement suf-
fers damage otherwise.
A related type of exposure—increased liability precisely from a company’s sus-
tainable ethos—comes from our own vault of strange but true business case studies.
Early on in a potential development project we were bidding for, we booted off the
team we had cobbled together one company that simply was not aligned with our sus-
tainable beliefs and practices. We initially thought it was, but once we realized we
were mistaken, we rectified the situation as swiftly as possible. This erstwhile team
member sued us for breach of an agreement that had never existed. Lessons learned:

1 Sometimes it does seem that no good deed goes unpunished, and
2 Vet, vet, vet and continue to vet alignment of all businesses potentially involved in
a joint project since just the least bit of friction can amount to a peck of pain.

Short-Term and More Tangible
Revenue/Value Creation

ASSET VALUE ENHANCEMENT
It is our contention that the asset value of a green building is greater than that of an
equivalent standard building simply built to code.
The value of a company share on the stock market can largely be summarized as the
value of cash the company holds plus the discounted value of all the future cash flows.
The real estate world works similarly. Buildings as such don’t have any cash, so the
asset value is simply the discounted value of projected future cash flows. How does
green affect these future cash flows?
A green building, thermally more efficient, has a reduced cost maintenance structure.
It is typically built to higher standards, calling for less reserves set aside for future main-
tenance. And productivity within a green building—a topic addressed in Chapter 7
by our COO, Colin Coyne—is superior to that of a conventional building, auguring
stronger demand for this type of product in upcoming years.
Those, at least, are the main financially tangible arguments for maximizing the value
of a green asset. We probably should have had those arguments foremost in our mind