Construction Companies Go Green

The construction industry has discovered that greening its energy sources with renewable energy initiatives is good not only for the global environment, but also for the bottom line.

Many construction companies took their cue from Ray Anderson, the late CEO of Atlanta-based global carpet company Interface. When Anderson decided to move Interface’s manufacturing operations toward full sustainability in the mid-1990s, his top executives argued against it. They didn’t think the costly move was good for its balance sheet. Anderson disagreed and prevailed less than a decade later when results proved him right.

Anderson was hailed as a corporate visionary. Interface was saving $400 million a year by reducing waste, decreasing greenhouse gas emissions by 92 percent and cutting water usage by 75 percent. And profits doubled.

Five Reasons Why Going Green Makes Sense
Construction company managers, along with decision makers in practically all industries, are in the process of adopting green technologies. And for sound reasons. The U.S. Green Building Council (USGBC) listed the following five reasons for going green:

1. Strong growth is projected for the global green building market.
In 2013, the global green building market grew to $260 billion, accounting for an estimated 20 percent of all new U.S. commercial real estate construction. This trend is expected to intensify in the coming years, both in the United States and internationally. Commercial building owners and managers plan to invest an estimated $960 billion globally between now and 2023 on greening existing infrastructure. The priority areas cited include energy-efficient heating, ventilation and air conditioning, as well as windows, lighting and plumbing fixtures.

2. Green projects are proliferating.
A recently-published global survey of construction companies found that some 45 percent have plans for new green institutional projects and 50 percent have plans for green renovation work.

3. Companies are willing to pay more for green technologies.
A recent Nielsen global survey on corporate social responsibility found that more than half (55 percent) of the respondents said they are willing to pay extra for products and services produced or offered by companies committed to positive social and environmental impact.

4. Sustainability improves profits.
Sixty-one percent of corporate leaders participating in the Nielsen survey believe that sustainability leads to market differentiation and improved financial performance.

5. Going green is cost-effective.
Owners of green buildings reported that their return on investment improved by 19.2 percent on average for existing building green projects and 9.9 percent on average for new projects. Building value increased by 10.9 percent for new construction and by 6.8 percent for existing building projects.

Key Takeaways
Don’t sacrifice profits. Companies can make good on sustainability pledges and still create value.

Consider the entire spectrum of solutions. This is a pragmatic way to evaluate all available solutions as well as potential partnerships.

Focus on partnerships. Finding the right development or financing partner can make all the difference. Seek out relationships with reputable technology suppliers and service providers to help shorten the learning curve.

If you have any questions about a new or existing building project, please contact your advisor at (805) 963-7811.