The Value of Green Building Certifications

The past decade has seen a considerable increase of environmental building certifications across the world, with assessment methods like BREEAM becoming increasingly popular not only in the UK, but on an international level.

These type of voluntary certifications are pursued in different types of buildings for a variety of reasons. In the public sector, this is often due to government requirements, whilst in the office and retail sectors this is more typically related to improving the company’s public profile and attracting clients. As these certifications are getting progressively more prominent and as the relevant stakeholders are becoming more aware of them, the interest in identifying additional benefits is increasing. This article analyses the collateral advantages of building environmental certifications from the perspectives of the building occupants, owners and developers.

In one of my previous articles on the Cost of Green Construction, I explained that the additional capital cost for green construction is not particularly high, especially if the relevant requirements are integrated during decision-making and at the very early design stages.

Research by the BRE (Building Research Establishment) showed that the achievement of the lower BREEAM (Building Research Establishment Environmental Assessment Methodology) ratings incurs little or no capital cost. The research used actual construction data from three case studies: an office building, a school and a community healthcare centre. It analysed the capital costs of measures to improve sustainability and life cycle operational costs. The research also studied cases targeting higher energy ratings, where the extra cost was no more than 2%; this was estimated to be paid back within two to five years due to utility savings.

In the past, green construction came at a higher premium, due to the lower availability of technologies, but also due to the limited expertise of the building sector’s professionals. Due to the increasing demand of green technologies, technologies themselves are becoming less expensive; at the same time, professionals’ expertise with regards to green building design and technologies is improving. It is worth adding here that green building certifications also encourage or mandate safety on the construction site, responsible material sourcing and enhanced construction management, all of which contribute to reduced costs and improved working practices.

The previous paragraph explained that the cost premium of green construction is nowadays very low; this is reinforced by the fact that green buildings can achieve very significant energy and water savings, thus considerably decreasing operational costs. Last month, a Passivhaus domestic property, designed by Colin Usher, won the Buildings and Energy Efficiency Awards; its energy cost is only £15 pounds a year, saving an estimated £1,800 annually on energy bills. In the non-domestic sector, the One Angel Square, the Co-operative Group Headquarters at Manchester, is predicted to save 80% in terms of carbon emissions, or 50% in terms of energy consumption; it is thus estimated to save the group £500,000 annually, compared to the their previous head offices.

For these types of large organisations, green certifications can be closely linked not only to operational cost reduction, but also to Corporate Social Responsibility requirements. The wide uptake of voluntary schemes and the existence of mandatory reporting mean that it is important for property companies to monitor the use of green building certification and energy ratings in their portfolios. GRESB (Global Real Estate Sustainability Benchmark), an industry-driven organisation committed to assessing the ESG (Environmental Social Governance) performance of real assets globally, produces an annual report, including, among other characteristics, assets’ green certifications. Their 2014 report has found that 44% of their survey participants obtained green building certificates for building design, development and structure, at the time of construction.

Having a green certification is also related to the asset’s value. The fact that green certifications are more common in premier construction, means that it is often very difficult to differentiate between the value that a green certification brings to the asset by itself. Nevertheless, in the high-end office sector and especially in areas such as central London, green certifications are a requirement of high-profile clients who are looking to meet their CSR requirements, to attract talented employees and to mitigate risks.

There is anecdotal evidence suggesting that environmentally certified office buildings are rented more quickly and for higher rates. Therefore, a green property decreases the likelihood of the property being empty or becoming obsolete. Large property companies take risk mitigation very seriously and green certifications are among the characteristics they look for when undertaking their due diligence investigation.

Risk mitigation does not merely refer to purely financial risks, but it also includes aspects related to climate change and to extreme weather phenomena, such as flooding. For example, BREEAM requires minimising or mitigating flooding risks, whilst addressing climate change and the expected temperature increase, thus future-proofing buildings for weather-related changes and events. Since a building is expected to last for 50 or even 100 years, future-proofing is a very significant aspect and large stakeholders are willing to invest in order to ensure their project’s longevity and to mitigate relevant risks.

Last but not least, green buildings go hand-in-hand with improved interior conditions. High air quality, improved thermal comfort and lighting conditions are among the requirements of green certifications. Those factors are all closely related to improved occupant health, both physical and mental. The aforementioned factors are particularly important in education and healthcare environments. On top of this, and in relevance to the office sector, work productivity increases when employees are satisfied with their working environment. Absenteeism is reduced and employees are happier, thus producing more and better quality work for their companies.

There are numerous advantages of green building certifications. Increased asset value, risk mitigation, enhanced indoor conditions and consequent health benefits, as well as decreased operational costs, are aspects from which all the involved stakeholders can benefit: building occupants, owners and property developers.

Image courtesy Wikimedia Commons. 


Related posts