In the feedback to my last post (which was published at GreenExpo365.com and on a few different sites), some have questioned whether we should talk in traditional terms of ROI at all since components of a green building results are not always easily measurable. Others commented on some of the confusion created by the perception of expectations that the certification/rating systems will deliver. Another interesting perspective focused on the greenest building will only be the greenest building and deliver ROI if an emphasis is placed on operations and maintenance training.
Let’s revisit the three areas of ROI that I identified:
1.) the softer attributes of building green—i.e. social responsibility, sustainability policy and branding for employee retention and/or competitive stance
2.) the more traditional sense of ROI —i.e. decrease in expenses due to energy efficiency, lower water usage, productivity/health, mitigation of storm water fees, higher rental absorption and premiums, increase in market value and
3. ) the return on investment for the planet i.e. lower energy use, reduction in carbon footprint, resources conservation, etc.
Is there or should there be a tool that begins to quantify or present a composite rating across these three areas? What are the stronger case studies or measurements that currently exist for the individual areas? I ask these questions because I truly think we can build further momentum by transforming these values into a more common and accessible language.
Interesting in reading more on this topic? Here is some recent content that I have found related to the ROI question:
On greenbiz.com, Sara Olsen discussed the potential for growth in green affordable housing and the Social ROI that could be achieved:
“The social ROI is attractive. We calculated that for each dollar of grant, with the right green design and services, approximately $10 of social value would be returned to society, in the form of such things as reduced health care bills for seniors (who can put off going to a nursing home longer because they can live closer to family or caregivers without leaving their homes) and reduced energy consumption and carbon emissions (due to more efficient siting and design). “
The Journal of Sustainable Real Estate recently published its second volume of papers focused on real estate and the sustainable building market. The publication is funded by CoStar and managed by The University of San Diego Burnham-Moores Center for Real Estate (Norm Miller of the University of San Diego and CoStar is its editor) . The American Real Estate Society supports the journal as one of its official publications. A few of the papers in particular analyzed cost, benefit and ROI of green real estate:
04 - Carbon Markets: A Hidden Value Source for Commercial Real Estate?
07 - Capital Markets and Sustainable Real Estate: What Are the Perceived Risks and Barriers?
08 - Uncertainty, Real Option Valuation, and Policies toward a Sustainable Built Environment
10 - The Challenges of Identifying and Examining Links between Sustainability and Value: Evidence from Australia and New Zealand
11 - Integrating Sustainability and Green Building into the Appraisal Process
A new report released by the Center for Neighborhood Technology and American Rivers quantifies the economic value of green infrastructure’s benefits – the key to helping municipalities adopt this innovative and cost-effective stormwater management approach. “The Value of Green Infrastructure: A Guide to Recognizing Its Economic, Social and Environmental Benefits” is a broad analysis that is the first to place an economic value on the numerous benefits provided by green infrastructure.