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For many companies trying to increase profitability without increasing costs, reducing electrical consumption provides a very attractive return on investment. There is a direct correlation between capital investments in energy reduction and profitability. With the economy trending in an upward direction, more and more businesses are looking to go green and save money.
A new study from University of Notre Dame management professors Edward Conlon and Ante Glavas looks at Leadership in Energy and Environmental Design (LEED)-certified bank branches at PNC Bank.
In their study, “The Relationship between Corporate Sustainability and Firm Financial Performance,” they looked at 562 PNC bank branches. Of those, 93 were LEED-certified and 496 were not. Conolon and Glavas concluded that the employees who worked in the LEED-certified branches were “more productive and engaged in their work.”
“It’s a significant finding, and it surprised me,” Conlon, an associate dean and Sorin Society Professor of Management said in a statement. “We compared the amount of money deposited at LEED and non-LEED branches, and we found more money has been deposited in the LEED branches. We divided the amount by the branches’ total number of employees to come up with a per-employee dollar amount.”
That per-employee dollar amount was nothing to sneeze at either. Conlon and Glavas found at LEED bank branches $461,300 per employee more was deposited, after controlling for other variables that influence performance (such as: consumer net worth, employee demographics, market demographics, size and age of branch, marketing spend). The researchers were not certain if it’s because LEED buildings are more attractive to visit or because their employees are more satisfied, and consequently providing better service.
“PNC has built more than 100 LEED-certified buildings, which is more than any other U.S. company,” Conlon says. “So, PNC is perfect for a LEED study because they have a lot of them and the branches all do the same thing — same products, same systems — the only thing that’s different is the LEED strategy.”
The researchers say the strategy is working, whether it’s because the buildings look better or the people inside are more fulfilled. Speaking with customers at one of the LEED branches, they mentioned that knowing the company is working at reducing electric consumption makes them feel better about the bank and would be a contributing factor in recommending PNC to family and friends.