Sustainability is a buzzword in business, but green doesn’t mean that you can’t also be profitable. While the first cost is higher, there are long-term benefits that even industry-leading companies are still coming to grips with.
“It’s like anything else; you’re buying something that’s going to perform better. It’s a higher quality product,” says Michael Barnard, project director at Oxford Development Co.
He was one of three business leaders who shared experiences about sustainability benefits at Duquesne University’s Entrepreneur’s Growth & Networking Conference this summer.
Energy efficient equipment and newer technologies cost several percentage points more, so it can be hard to show the value to investors, he says. Funders are interested in the investment return; they don’t always buy into the operational savings in a development project.
The price and our culture’s fixation with it is the biggest obstacle, says Marc Mondor, LEED fellow and co-founder of evolveEA, a green building and design consulting firm.
“You can go out and buy a pair of shoes for $3, if you want, but don’t be surprised if they break down after two weeks,” he says.
Prioritize for value
You have to figure out the value proposition. It’s not the same for everybody, and it can change year to year.
Mondor says goal setting and determining what is success for your particular operation is critical, and the earlier you can define the framework, the better.
It’s also important to remember that it might take two or three years to design and build a new building, but you could operate it for decades. You must make sure what you’ve set into motion endures.
“You want to make sure that the operations, which have more impact, actually continue on,” he says.
In the early 2000s, Oxford’s clients drove its approach to green building, Barnard says, with large projects like 3 PNC Plaza, CONSOL Energy Center and the Children’s Hospital of Pittsburgh of UPMC.
Then, Oxford applied those lessons to its own development projects, adding more green practices each time. For example, The Yards and the Hot Metal Flats projects have electric car charging stations, Barnard says.
“Part of it is we believe in this,” he says, “but we’re also trying to take a little bit further step with every building that we have, so that we can demonstrate that this works within budget.”
But it’s still difficult to make the case that you can charge higher rents, for example, if a building has sustainability elements, Barnard says. It’s hard to differentiate between sustainability and the environment you’re creating.
Proving the case
Documenting what you’re doing is one lesson Giant Eagle has taken from its sustainability efforts.