• 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.

Howard continues: “A company can build an energy system that is from renewable energy sources, it can purchase materials that are recycled, it can buy plant- and grass-watering systems that use reclaimed storm water. We have found that companies that choose to invest their money in eco-friendly ways are differentiating themselves as ethical organizations. People from practically every corner of society scrutinize firms’ environmental activities with an eye to environmental impact. Previously, this scrutiny was largely focused on how products were being made. Now, it is extending to the kinds of office buildings companies develop.”

Although a company might trim its power bill by situating a building to capture as much daylight as possible, the payoff isn’t limited to reducing costs; it reaps enhancements in worker productivity, too. A study prepared for the California Energy Commission found that call-center workers processed calls 6 percent to 12 percent faster when they had views to the outside, compared with workers without a view. They also performed 10 percent to 25 percent better on tests of mental function and memory recall compared with their “shut-in” co-workers.

A similar study of daylight and productivity, by Carnegie Mellon University, found an average increase of 7.1 percent. A study of the effects of skylights on retail sales, by Sacramento, California-based consultancy Herschong Mahone Group, found 40 percent higher sales at stores with skylights than at stores without them. Herschong Mahone also studied the effects of daylight on the academic performance of more than 8,000 third- through sixth-graders. During one year, students who had the most daylight in their classrooms progressed 20 percent faster on math tests and 26 percent faster on reading tests compared with students who had the least daylight.

Howard maintains that companies can build green and earn gold certification at little to no extra cost. “Our own studies indicate most green buildings involve an additional 2 percent cost up front, compared with traditional buildings, but we have certified a number of buildings that involved no additional cost.” That little bit can go a long way. A study by California’s Sustainable Building Task Force found that an up-front investment of 2 percent in a green building design results in an average saving, over the life of the building, of 20 percent of the total construction cost — 10 times the initial investment.

It’s a compelling prospect. As Howard puts it, “Small improvements in the efficiency of buildings, the cost of energy and water, and the productivity of employees add up very quickly into real financial value.” That’s the kind of green Henry Ford would understand, too.

Russ Banham is a contributing editor of CFO.com.

Fast Lane

When Toyota Motor Sales USA contemplated its new South Campus headquarters in Torrance, California, it didn’t start out with the idea of building green. Toyota’s goals were to consolidate employees at the campus, reduce occupancy expenses, and provide future flexibility. But the automaker also wanted to demonstrate to its shareholders that a green asset was more valuable than conventional buildings. “We were housing employees at a number of sites in the Torrance area,” says Sanford Smith, corporate manager of real estate and facilities at the Toyota unit, and an architect by training. When the company considered how much time employees spent driving back and forth between buildings, he adds, we “felt we were losing productivity.”

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