Persuasive ‘Everyday’ Sustainability Case Studies
To lots of companies, sustainability can seem like a pretty exotic exercise. This perception can make it hard for us to convince clients and colleagues about the benefits of green building. That may not have to be the case.
‘Tackling the Energy Monster’ was today’s Wall Street Journal report on how soaring energy prices have triggered a reality check among small businesses, which often pay higher utility rates than large companies and are less able to pass their cost increases on to their customers.
This article was packed with eight great case studies of specific ways, backed by cash results, that companies re-tooled their businesses to cut or avoid energy costs. I call these actions ‘everyday sustainability’ because they’re rather unflashy, but are accessible to many businesses and deliver long term positive results.
Here’s a partial list of the winning actions:
- Missouri delivery company: Using GPS-route mapping software from United Parcel Service, Inc. to eliminate excess miles driven by drivers. 25,000 miles were cut. Even though unleaded gas prices rose 31% last year, this company only experienced a 1% increase in fuel costs for that period (!). The company even saved more than that since the drivers were paid by the hour. Less miles driven = less payroll expense.
- Oregon shoe manufacturer: Had new facility built using designed-in energy saving options. The energy-saving improvements cost an additional $149,140. An energy audit revealed that the company saved $32,000 annually with the new facility. In addition to that, the new building qualified for $52,000 in state tax credits to offset the costs. The company figures it will recoup its entire (additional) investment within three years.
- San Francisco civil engineering firm: 40 employees and a second office in New York. Employees now travel 70% less than before due to web conferencing. The web camera and projector cost $70 and $850 respectively. The firm saves $30,000-$40,000 annually.
- Interest-free financing from public utility: Southern California Gas & Electric and San Diego Gas & Electric offer interest free loans of up to $50,000 to small-business customers if they use the funds for energy efficiency upgrades and equipment. That’s in addition to the free utility audit.
So, check the article out and add it to your arsenal of proof that sustainability initiatives are real world actions and save lots of money.
If you’ve got any good case studies to share with the rest of us, send them along so everyone else on the Green Journey can benefit from your good experience.
Galley Eco Capital Joins the Business Council on Climate Change Business Partnership. Takes Action To Reduce Greenhouse Emissions.
Galley Eco Capital has a history of taking action to protect the environment. They now join a list over 82 BC3 member companies dedicated to taking action to address global climate change, while maintaining a competitive bottom line. “Participating in the BC3 is a natural step in our commitment to both grow our business and be environmentally responsible” says Lisa Michelle Galley. “We are excited to work with other members of the BC3 to develop innovative, profitable business approaches that also directly address the growing threat of climate change.”
The BC3, a collaborative partnership with the Bay Area Council, the San Francisco Department of the Environment and the United Nations Global Compact, is poised to make the San Francisco Bay Area a model of commercial climate stewardship by inspiring leadership on the pressing issue of climate change, and giving business leaders the tools to reduce their GHG emissions. The BC3 recognizes that the business community has the power to significantly impact climate change, and it functions as an avenue for communication between companies that have stepped up to the plate to address this challenge. The BC3 seeks to inspire others to do the same, and to build a business movement for climate stewardship.
“The Bay Area has always been an engine of business innovation and growth combined with social responsibility and companies like Galley Eco Capital are a reflection of that environment and culture” said Andrew Michael, Bay Area Council Vice President of Sustainable Development. “They and other visionary BC3 members are proving that the protection of the environment is clearly aligned with the protection of profits and market share.”
The BC3 is built around five “Principles on Climate Leadership” which relate to the areas of: Internal Implementation, Community Leadership, Advocacy & Dialogue, Collective Action, and Transparency & Disclosure. These principles are founded on the belief that private business can shift practices to realize economic growth while maintaining environmental sustainability.
“The addition of new members gives us a great opportunity to redefine how business is conducted in the Bay Area,” says Jared Blumenfeld, Director of the San Francisco Department of the Environment, “and to show that we can surpass the status quo.” For additional information on the Business Council on Climate Change, contact: bc3@sfgov.org or for information on Galley Eco Capital visit: www.galleyecocapital.com
UN ’s New Report on Responsible Property Investing
Today, multiple posts are required just to stay on top of the good news onslaught.
Earlier this year, I put out a bunch of posts about the good work of the Responsible Property Investing Center and why it is so critical for spreading the principles of triple bottom line investing within commercial real estate.
Now, we’ve learned through Dr. Gary Pivo, that the UN has just issued a new, stronger report cataloging the many successes institutional investors have enjoyed applying the principles of responsible property investing. It also urges the rest of the investment real estate community to work harder to adopt its Principles for Responsible Investment.
Still mulling over whether triple bottom line investing would make a difference to your portfolio’s returns? Then you should definitely take a look. I think the terms ‘triple bottom line’ or ‘environmental, social, and governance’ tends to trip up some of our old school colleagues.
When you read through the principles plus the examples of day to day actions most of the signatories are taking across their portfolios, however, it becomes pretty clear: RPI simply represents good management practices.
Already have some experience with applying responsible property investing across your asset portfolio? By all means, speak up! The rest of us would love to hear about it.
Gadgets & Video: Energy Neutral Green Affordable Housing
So while the rest of the known universe makes their new iPhone plans, I’m headed for a Flip Video Ultra Camcorder. And I’ve discovered that green videos on YouTube are the best way to cultivate a new camcorder obsession. But enough about me…
This video’s been out for a few weeks, but highlights a good area of focus since the Multihousing Trends and PCBC 2008 are rollin’ into town next week.
Institutional investors and lenders often think of affordable housing as a niche — “Oh its just a big tax credit play”, they sniff. What many of these folks overlook is that some of the most clever and effective financial innovations within real estate actually originate from lenders and investors who are active in the affordable housing and community lending sectors.
It is amazing to me that so many of us in finance and investment think that the wheel has to be re-invented to finance green. No — you might not take on all community finance ideas 1:1, but this is an area where professionals have already been forced to get creative about delivering capital to obtain specific social purposes. Now its good that they can add positive environmental outcomes to their list as well.
Green Journey Tip:
And in case you need to step up your download on green affordable housing, by all means subscribe to KnowledgePlex Week In Review. Then sit back and prepare yourself for maximum affordable housing news satiation.
Finance Industry Spin or Denial on Sustainability?
I thought I’d share some of the latest that has made its way over to my inbox over the past few days. Take a look and let me know what you think. Is it spin? Denial? Spinial?
The Mortgage Bankers Association on Green Lending: “We’re already underwriting green.”
MBA research director Jamie Woodwell put out an article in the March 2008 issue of Mortgage Banking, their trade magazine, titled “Class G–The New Class A” (sorry, folks, no link, it was sent to me from a subscriber). Within a piece that includes decent info on the greenwave hitting finance, begins a decent lead-in to the MBA’s take on green lending:
“For most lenders, green lending is simply a new shade of their traditional lending programs.
As with any request for financing, a lender approaches the financing of a green building by developing an underwriting of the property that takes into account property-specific income, expenses, property value and costs. The extra challenge in financing green buildings has been the degree to which the underwriting associated with a building’s green features differ from those of a standard building.
But the commercial/multifamily lending industry is accustomed to heterogeneity in the same properties it underwrites. No two properties have the same location, tenants, lease rolls, rents expense mix, purchase price and cap rate — think, for example, 1970’s New York office tower, 1980’s Sacramento, California, industrial park; and 1990’s Atlanta apartment building. The industry has become extremely adept at recognizing these differences through underwriting — a process in which a property’s unique circumstances are researched, assessed and factored in.”
And that leads to this:
“As a result, in most cases, the existing commercial/multifamily lending paradigm already takes into account a property’s green characteristics. When fully revealed, a full underwriting and appraisal discounted cash flow (DCF) takes into account, for example, that a green property’s initial cost may be higher, its rents higher, its utility expenses lower, its lease rollovers shorter and its terminal value higher. The result is that economic costs and benefits inherent in a green building can be recognized in, and will generally flow through its underwriting.”
Green Journey Take: Two observations: 1) Green buildings in total make up only about 2% of the entire real estate market, and 2) the nationwide credit crunch has been going on for much of the time that sustainability has been getting traction within commercial real estate. There are lots of deals out there that are not getting done. Nevertheless, the MBA has already counted so many private sector green loans being underwritten, not to mention confirming the underwriting on those loans as being ‘green’, that it can publish “typical” underwriting standards.
At the time of this writing, two major industry coalitions, the Green Building Finance Consortium, and the Market Transformation to Sustainability, are still pushing hard for leading institutions, some of whom are named in the article as green lenders, to adopt a common set of underwriting protocols for sustainable real estate. Also note that there are some major lenders cooperating with these efforts — they’re just not quite ‘there’ yet. Real estate investors are filling conferences, looking for elusive ‘green finance’ packages.
But you can prove me wrong and educate all of us: How many commercial real estate loans have you done with your lender, where they’ve already given you economic underwriting credit for the green features on your investment property? Please share your comments here, as there are many in the industry who would like to know. Plus these pacesetters deserve to get credit where credit is due.
The Mortgage Reports: Even $150/Barrel Oil Doesn’t Matter — Consumers Will Keep Drivin’
I dig Dan Green. He gives some of the most consistently straight-up download on the residential finance market. And he’s big on the crunchy technicals, which is good. Regular Green Journey readers also know that I’ve got a “thing” about energy price risk’s negative effects on US real estate. Actually, it is fair to say that quite a few of us in the real estate industry do. Now read Dan’s recent post about oil prices and consumers.
You make the call: Is Dan tellin’ it like it is or like it ain’t? Are US consumers really going to keep up their current driving habits no matter how high gas prices rise?
Please tell us what you think.
