The A-B-Cs of green buildings
Planning a building’s positive and healthy indoor surroundings, while caring for the global environment, has become the stated goal of many architects, engineers, developers, city planners, interior designers and related professions and trades.
“Going Green” is a concept that is gaining enormous momentum. This article is designed to provide an overview of the reasons building owners are going Green and help provide a basic understanding of the processes involved.
What Is a Green Building, Anyway?
“Green, or sustainable, buildings use key resources like energy, water, materials and land more efficiently than traditionally constructed buildings,” said Stephen Bushnell, Fireman’s Fund Insurance’s Real Estate Industry Product Director.
“With more natural light and better air quality, Green buildings strongly attract tenants who prioritize employee health and comfort,” said Bushnell. “According to numerous studies, this translates into increased retail sales, higher productivity and fewer employee sick days taken.”
These environmentally friendly Green buildings are replacing traditional construction as businesses become aware of these advantages, reported the United States Green Building Council (USGBC). The council, comprised of allied professional organizations, promotes the development of a new generation of buildings that deliver high performance inside and out.
As the leading coalition on environmental building matters, USGBC influences the way buildings are designed, built and maintained. Their website and publications state that Green buildings, when compared to conventional buildings, are:
- 25-30 percent more energy efficient
- Characterized by lower electricity peak consumption
- Often generating renewable energy on site
- More likely to purchase grid power generated from renewable energy
Why Buildings Are Changing
“Green buildings are a viable trend that is just going to grow stronger,” said Bushnell. “The question no longer is why would developers build Green? But, rather, why would anyone not build Green?
“Market demand for Green buildings is surging as businesses study the long-term financial benefits, lower operations and maintenance costs and savings from increased productivity and health,” added Bushnell. “Employers also find it easier to hire and retain top talent to work in these buildings.”
What Are the Benefits?
The Harvard Business Review, in its June 2006 issue, noted numerous studies that have proven the financial advantages of going Green – and the benefits businesses gain with stronger employee retention and fewer illnesses.
Green Buildings boast lower operation and maintenance costs. The State of California’s Joe Serna Building, in Sacramento, has realized savings of $1.50 per square foot annually – or $1,425,000. At an 8 percent cap rate, this equals $17,812,500 additional building value, reported GreenOrder, a sustainability strategy and marketing firm in New York City, and Thomas Properties Group, the building’s developer and manager.
The Environmental Protection Agency estimated in 2001 that a 30 percent reduction in energy use equates to a 5 percent increase in net operating income. Further, a 30 percent reduction in energy use generates $25,000 bottom-line improvement for every 50,000 square feet of occupied office space.
Another attractive element of Green Construction is the Energy Policy Act of 2005 that provides for federal tax deductions for highly efficient commercial buildings and tax credits for fuel cells and micro-turbines used in a business. States and municipalities have also enacted a variety of incentives aimed at Green buildings and reduced energy and water consumption.
What Is LEED?
“There”s a roadmap showing how successful a Green building performs compared to peer structures,” said Bushnell. “It’s called the Leadership in Energy and Environmental Design (LEED) SystemSM – developed by USGBC to provide a guideline and rating system for Green buildings. USGBC currently certifies 600 buildings and 6000 more under construction. For more information, see this article: What is the LEED Rating System?
LEED Energy-Saving Studies
According to the Energy and Atmosphere Technical Advisory Group for LEED, a detailed review of 60 LEED-rated buildings concludes that an up-front investment of less than 2 percent of construction costs yields life cycle savings of over 10 times the initial investment.
For example, an initial up-front investment of up to $100,000 to incorporate Green building features into a $5 million project would result in a savings of at least $1 million over the life of the building.
Productivity and Health
“Numerous studies indicate that employee absenteeism is reduced by up to 15 percent in Green buildings. The impacts on workers’ compensation and health insurance costs, employee morale, tenant satisfaction and productivity are obvious,” said Bushnell.
Four of the attributes associated with Green building design – increased ventilation control, increased temperature control, increased lighting control and increased use of daylight interior illumination – have been positively and significantly correlated with increased productivity, reported USGBC.
“A 1 percent increase in productivity – equal to about 5 minutes per working day – is equal to $600 to $700 per employee per year,” reported USGBC. “A 1.5 percent increase in productivity – or a little over 7 minutes each working day – is equal to about $1000 per year. The relatively large impact of productivity and health gains reflects the fact that the direct and indirect cost of employees is far larger than the cost of construction or energy.”
Unique Risk Transfer Program
Fireman’s Fund is the first and only insurance company to offer property coverage tailored to building owners who are committed to new Green, or environmentally sustainable, construction – or rebuilding or renovating following a loss. For more information, see this article: Fireman’s Fund Introduces New Green Coverages
Source: Fireman’s Fund Insurance Company
At Ellis Insurance, we are proud to be a green insurance leader. We have been providing exceptional service and intelligent insurance for over 20 years. Please contact us for additional information on our creative and industry-leading green insurance alternatives.