Value Beyond Cost Savings - Green Building Finance Consortium

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Value Beyond Cost Savings: How to Underwrite Sustainable Propertiesis also critical to measure and understand. Enterprise-level occupant performance consistsof reductions in resource use, improved reputation/leadership, compliance withinternal/external policies or initiatives, and reduced risk to future earnings.A key focus of occupant performance is the occupant’s share of potential reductions inoperating costs versus the share going to property owners. Who pays for the sustainableinvestments and who gets the benefits? To properly allocate costs and benefits betweenlandlords and tenants, leases terms controlling these distributions must be analyzed.Improved reputation/leadership can be assessed directly by surveys, stock analyst reports,and indirectly through assessment of how sustainable property investment has influencedrecruiting, employee retention or satisfaction, marketing and sales, and brand awareness.This “evidence” of occupant performance relative to improved reputation and leadershipmay be found in the surveys and market research done for other parts of an occupant’sbusiness, and not typically in a traditional building measurement or monitoring program.Occupant performance relative to compliance with internal/external policies and initiativescan be measured through an examination of trends in the importance of owned or leasedreal estate to the Global Reporting Initiative, the Carbon Disclosure Project, therequirements of socially responsible investment funds, government agencies, or acorporation’s own CSR strategy and communications. At a property level, the question ishow important is sustainable owned or leased real estate to the types of tenants expected tobe leasing in the building?The final measure of enterprise-level occupant performance is reduced risk to futureearnings. This type of performance can be measured through monitoring of litigation andlegal costs, subleasing trends relative to sustainable property, energy cost volatility, andchanges in the level of importance of sustainability to key employees, customers, capitalproviders, vendors, and other stakeholders. If the importance of sustainability increases tothe stakeholders, the risks to future earnings, on either a positive or negative basis, couldbe significantly influenced by sustainable property investment.Key Considerations in Assessing Occupant Performance InformationIdentifying, evaluating, and applying the results of research testing the relationshipbetween sustainable building features/ outcomes and health and productivity benefits ischallenging. Fortunately, the challenge is not dissimilar to the difficulties the businessworld faces in the application of any scientific or academic study. And, as discussedabove, perfect studies or knowledge about the relationship between buildings and health orproductivity is not required in order to be useful.Some of the key issues to be considered in assessing and applying the results of health andproductivity studies include:154
Value Beyond Cost Savings: How to Underwrite Sustainable PropertiesAccess to key researchIt is difficult and time consuming to identify and access the key scientific research relatedto health and productivity benefits. Expanded Chapter IV, Appendices IV-C and IV-Didentify and describe over 200 studies and the Consortium’s Research Library andIndustry Resources sections (see index codes10.1, 10.2 and 15.63) provide additionaldetail and updates of ongoing scientific research. As with the selection of comparableproperties, it is difficult to know if someone advocating the potential health andproductivity benefits of a property has identified the key studies, or just included those thatsupport their point. The best way to address this issue is to seek independent sources, andrely upon meta-studies 84Understanding how and why sustainable property outcomes affect health and productivity.While there has been a significant amount of research, as presented in Appendix IV-C andIV-D, that test whether sustainable outcomes like indoor environmental quality,temperature control, lighting, privacy and interaction, ergonomics, and access to thenatural environment affect health or productivity, the science on how and why thesesustainable outcomes influence health and productivity is still not well understood in manycases. What are the physiological and psychological characteristics of light, temperaturecontrol, or noise that influence health and productivity. Better understanding andarticulation of these linkages will result in improved hypotheses and better, more logicaltesting and presentations that will be more convincing to the business community.Linking specific features/strategies to sustainable outcomesWhile studies demonstrating a relationship between ventilation, dampness, daylighting,etc. and health and productivity outcomes are well established, the volume and quality ofresearch that links specific sustainable features or strategies to specific ventilation,dampness or daylighting outcomes is often not as robust. Importantly, even when thelinkages are well understood, many scientific studies do a poor job describing sustainablefeatures or strategies, making application of these studies to specific buildings with adefined set of features or strategies difficult.Statistical/data problemsThe reliability and accuracy of the specific quantitative results from many of the healthand productivity studies is questionable. This is due to the extreme difficultly in thecollection of data, and controlling for the scores of variables that influence occupant healthor productivity. Since health and productivity studies tend to focus on a particular84 Meta-studies are those completed by an expert in a particular field that provide a summary assessment and analysisbased on a review of key studies. The review is based on a qualitative, and often quantitative, assessment of the resultsof studies that have been done in the field. The websites of key research organizations like the Lawrence BerkeleyNational Laboratory, Carnegie Mellon and others can also be helpful in this regard.155
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Appendix FSustainable Property Fina
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Appendix GSustainable Property Cost
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Appendix HDiscounted Cash Flow Anal
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Property Type: CBD OfficeSquare Fee
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