Is there a business case for green buildings?

Much of my work in the construction industry feels like an irresistible force meeting an immovable object. The irresistible force in the imperative that the world is growing in population and running out of finite resources, the immovable object is the wide range of doubters who usually say “it costs more”, “the client won’t pay”, “we don’t understand the benefit”, “if it is so important the government should legislate, then we will have to do it”.

I was told by somebody senior in the property sector only last week that a sustainable building costs twice as much as a “normal” building by one of his mates who claims to have figures to prove it. Whilst I accept that there are some additional capital costs, in the main it is bad procurement that costs more, not sustainability. I think his mate should sack his procurement manager.

The industry needs to create a competitive supply chain capable of delivering high standards of sustainability. Recently Siemens and the Cities Climate Leadership Group’s awards for sustainable cities determined that there is not one city in the UK ranked among the top 10 sustainable cities in the world. We are falling behind and much of my work with www.supplychainschool.co.uk is dedicated to filling that gap. Most construction is delivered by a complex supply chain which is as strong as its weakest link - this needs to be improved fast.

I was intrigued by a well-researched report from the World Green Building Council this year which takes a wider perspective on the business case. It concludes that there is about a 10% capital cost difference between code compliant buildings and BREEAM outstanding or LEED platinum buildings.

However, the capital value of such buildings can be 15% to 30% higher. Rental revenues are reported as up to 30% higher and occupancy rates in USA and Australia are reported as higher, there is less conclusive evidence in the UK. The report goes on to talk about the 18% improvements in productivity of workers in green buildings and 8.5% shorter stays in hospitals. Of course these things are due to many factors like the quality of management and care but if these figures are anywhere close to reality the benefits are potentially huge.

Although this is a comprehensively researched report by a respected organisation, we need to take everything written by an organisation with “Green” in its title with a pinch of salt. Their perspective is to demonstrate the business case for what it right anyway so it could be said by some that the report lacks balance.

However, it goes some way to making the case in a way that clients, designers, contractors and planning authorities can understand. Whilst there is current and pending legislation which will change things, I believe that businesses are much better placed than governments to make faster and more compelling progress in this area provided the benefits are clearly understood.

For me the next step would be to combine the business case for green buildings with some thinking on social return on investment. This would make a fantastic case for sustainable development and construction. Maybe one day…..

Shaun McCarthy is an independent adviser, author and speaker in the field of sustainable business policy and practice