• Strategy
  • CFO.com | US

Greener Buildings, ‘Greener’ Bottom Line

Toyota, the National Geographic Society, and many other organizations are discovering that environmentally responsible facilities can also deliver financial benefits.

Toyota Motor Sales USA likes green the way Henry Ford liked black. Not that Toyota is offering customers a Camry “in any color they choose, as long as it’s green” — the division’s new Torrance, California, headquarters is one of the largest environmentally friendly building complexes in the United States.

Christened in April 2004, Toyota’s new South Campus complex — 624,000 square feet of office space in two large buildings on 40 acres — was designed and constructed according to guidelines established by the U.S. Green Building Council, a nonprofit organization promoting facilities that are environmentally responsible, profitable, and healthy places to do business. Toyota USA’s efforts earned it gold-level certification from the council’s Leadership in Energy and Environmental Design (LEED) rating system, its standard for a green building.

How does one win the gold? LEED is based on a system of points awarded for undertaking various architectural and construction activities. Toyota’s South Campus, for example, offers energy-saving natural daylight for 90 percent of occupants; recycled water for all cooling towers, landscape irrigation, and toilets; and a photovoltaic rooftop system that could power more than 500 homes with the electricity it generates from sunlight. All this makes for great relations with employees, shareholders, and the public, but there’s more to building green than winning the kudos of environmentalists. “We’re achieving a very strong financial return from our green building complex,” says Tracey Doi, group vice president and chief financial officer of Toyota Motor Sales USA.

”Green,” as in ”Greenbacks”

All good intentions aside, Toyota went green more for the payback than the praise. At a minimum, notes Doi, the LEED-guided design for the complex had to surpass a 10 percent return on investment. “The project focused on long-term operational savings to increase the rate of return,” she says. “For example, the use of highly efficient air-handling units, and gas-fired chillers in the HVAC system, resulted in a 58 percent energy saving compared with California’s stringent Title 24 Energy Code. The extensive solar rooftop system provides 20 percent of the electricity powering the complex. Besides the benefit of reduced energy costs of $1.5 million per year, we also save approximately 5 million gallons of water, or $22,000 per year, through the use of reclaimed water and the various water-reducing features of the buildings.” Compared with another major Toyota facility, the complex is achieving a 40 percent reduction per square foot in energy costs, by Doi’s calculations.

Higher job satisfaction and morale are additional benefits, contends Doi. “Office workers are often dissatisfied with the temperature, indoor air quality, acoustics, and lighting of their work environment,” she says. “We worked hard to ensure that over 90 percent of the associates in the complex have views of natural daylight and the outdoors. This makes a big difference,” adds Doi, since many of the employees in the South Campus complex “are part of the customer service team and are on the phone the majority of the day.”

While Toyota has not added up the dollar value of these productivity gains, Doi maintains that several studies of environmentally friendly office buildings “have documented productivity gains as high as 16 percent. With an annual payroll of $140 million at our south campus complex, even a 1 percent improvement in productivity would reap a saving of $1.4 million,” she adds. “With South Campus, we have been able to show that building an environmentally sensitive office complex can bring financial benefits — if your decisions along the way make good business sense and you keep your financial objectives front and center.”

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