Page 148 - The Green Building Bottom Line The Real Cost of Sustainable Building

GREEN IS THE COLOR OF MONEY 127

pany can document with any degree of precision (what would our benchmark be?),
I am not including this value-add in my overall accounting of the benefits of being
a green company. But just because I have not factored this into my analysis does not
mean that the value does not exist. On the contrary. The U.S. Green Building Council
cites numerous studies where employees in a LEED certified building have improved
productivity, higher retention rates, less absenteeism, and less sick leave. This is money
in the bank for employers, easily outweighing any perceived costs of owning or devel-
oping a green building. In an office environment, for example, productivity is reported
to be 2 to 18 percent higher in a LEED building. Such enhanced productivity would
allow companies to do more, take on more tasks, and/or operate with a smaller staff.
Whichever way you look at it, such increased productivity represents value.

Pulling the Data Together

We began this chapter by discussing the learning curve faced by a company intent on
becoming knowledgeable about and experienced in the practices of developing green—
going so far as to put an overall price tag of $1.56 million on this learning curve over
the course of three years.
We then considered the various ways a green development company might reduce its
costs and add revenue as a result of its green ethos. By now, you will hopefully agree with
me that there are indeed tangible benefits to going green. Among those benefits of cost re-
duction and revenue generation, we made the following conservative determinations:

■ We can expect insurance savings of about $29,000 annually.
■ There is a 50 basis point savings on loans on green properties. In the case of Green,
Inc., with $75 million in debt, this would amount to an annual savings of $187,500
($75 million × .0025).
■ A very conservative estimate of the reduced liability exposure of having a green port-
folio would be to consider that once in ten years one half of a percent of a typical
company’s total assets may be at risk to litigation of an extraordinary nature. A green
company would simply be insulated from such risk by avoiding a range of practices
that others would be less knowledgeable about. In the case of Green, Inc., this would
amount to an annual savings of $50,000 ($100 million in assets × .005 ÷ 10).
■ A sustainable company would conservatively see additional demand for green devel-
opment work amounting to 1.5 percent of net income on two projects annually,
each amounting to $15 million, for additional development income of $450,000
($15 million × 2 × 1.5 percent).
■ A sustainable company would see demand in the market for consultancy work very
conservatively amounting to 0.5 percent net income on projects worth $30 million,
for additional income of $150,000 annually.
■ A company could realize a one-time value enhancement of its sustainable portfolio, an
increase in value we have conservatively estimated at 5 percent of the equity portion
of the company’s holdings. We are not certain as to how long such an opportunity will