VideoHoward 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."
Notes Smith: "We also were losing the cultural identity that comes with having a close-knit community. The goal from a planning standpoint was to bring everyone back to the headquarters campus. But we had to do this without increasing occupancy costs — that was the financial hurdle. In effect, the South Campus buildings had to be cost neutral."
The division's chief financial officer, Tracey Doi, says that financial considerations were always at the forefront of decision-making. "Rather than go out and say 'let's build a green building' and 'how much does this cost?' we instead asked ourselves how we could build a complex that was sustainable and cost-effective," she explains. "It turned out that by pursuing LEED certification, we would get what we wanted financially. Ultimately, the structure did not have a cost premium."
The LEED system of providing points for specific design and construction decisions guided Smith in planning the complex. "When we set out to design the exterior of the building and were deciding what to enclose it in, either pre-cast concrete or a metal panel, we were swayed by the fact that metal 'skin' — basic warehouse-type construction — was more economical to build and offered significant sustainability benefits," says Smith. In fact, the metal-skin building enclosure is 30 percent more efficient than California energy requirements, which delivered a saving on the company's operational costs. Toyota took that saving, continues Smith, "and applied it to more thermally efficient, insulated, double-pane glass windows, which offer similar sustainability benefits. Had we built a traditional pre-cast concrete enclosure, we'd be looking at additional energy costs of $1.2 million a year."
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