Published on July 3rd, 2019 | by The Beam0
How Do Green Buildings Attract, Engage, & Retain Talent?
July 3rd, 2019 by The Beam
This article was published in The Beam #8 — Subscribe now for more on the topic.
For many in the investment industry, the term ‘green’ has long been synonymous with money — that is until recently. In today’s lexicon, ‘green’ has also become synonymous with environmental sustainability and social responsibility.
The dual interpretations of the word green need not be understood as mutually exclusive, though. Business leaders today are increasingly finding a healthy balance between financial, social, and environmental goals. And responsible investors know it’s possible to create robust and sustainable investment value without putting at risk the health of our planet, social wellbeing and potential for future earnings.
Look no further than the commercial real estate industry to see how cultivating a sustainable mindset supports the interconnected goals of creating environmental, social and financial value.
Sustainable features — like access to natural light, quality indoor air, rooftop gardens, and fitness and wellness centers — improve happiness, health and productivity.
The environmental case for green buildings
We all know the positive impact sustainability and green initiatives have on our environment, but few sectors have the ability to catalyze the greening of our world quite like commercial real estate.
The buildings where we live, work, and play account for one-third of the world’s greenhouse gas emissions and 40% of global energy, according to the United Nations. The resourceful among us see the enormous potential that presents for improvement and innovation.
Studies highlight this as fact: the building sector boasts the greatest potential to reduce greenhouse gas emissions compared to all other emitting sectors, according to the World Green Building Council. This deeper understanding of the industry’s footprint, coupled with the rise of green buildings and third-party benchmarking standards, has moved sustainability from the fringes into the mainstream of commercial real estate.
LEED (Leadership in Energy and Environmental Design) Certified buildings significantly improve efficiencies, consuming on average 25% less energy and 11% less water than non-green buildings. Some property owners are even taking this a step further, striving for ‘Zero Carbon Status’ — bestowed upon buildings that produce as much energy as they consume.
The environmental benefits and implications of sustainability are well-founded, far reaching, and give real estate investors enough reason to consider their value.
But they are just the tip of the iceberg.
Sustainable streams of talent
Green design offers several hidden benefits, particularly in office buildings where employers are on a never-ending quest to attract, engage and retain talent.
Talented workers — especially those in innovative sectors such as technology, healthcare and education — increasingly prefer to work for companies that share their environmental and social ideals. Sustainable buildings can be a litmus test for prospective employees looking to gauge the extent to which a firm is ‘walking the walk’ of their corporate values.
Today’s employees are also starting to demand amenities that support their health and well-being goals. In response, forward-looking companies increasingly choose and prioritize sustainable buildings, situated within sustainable communities that will attract and retain top talent, according to a report by the World Green Building Council.
A growing body of research demonstrates that sustainable features — like access to natural light, quality indoor air, rooftop gardens, and fitness and wellness centers — improve happiness, health and productivity. A recent survey by the US Green Buildings Council found 93% of employees in LEED-certified buildings said they were satisfied on the job, a stark contrast to 79% for employees in non-green buildings.
Green building certifications provide a baseline measure for sustainability, but amenities that demonstrate a visible commitment to the well-being of both people and our planet are what really make a building stand out. Employees seeking an urban lifestyle environment are drawn to buildings that effectively use natural light and outdoor spaces — such as a rooftop garden — or flexible indoor and outdoor spaces that provide a variety of locally driven, healthy eating options.
With Americans spending more than 90% of their time indoors, the need for buildings that have a positive impact on our health and well-being has never been greater.
The business case for building green
Green initiatives not only reduce a building’s environmental footprint and improve occupant satisfaction; they also make sense from a business perspective. Certain sustainability efforts, like the use of energy-efficient lighting and environmentally friendly building materials, can reduce expenses by up to 30%, according to the Morgan Stanley Institute for Sustainable Investing.
But while most of the spotlight falls on reduced risk and operating costs that come with sustainable features, not enough of the shine goes on the revenue boosting effects green buildings have for building investors.
Because today’s workforce craves socially responsible workspaces, buildings that deliver on this need have a significant competitive advantage. Many tenants will pay higher rents for sustainable properties and are happier in them, leading to higher retention rates, which directly impacts revenue. Additionally, improved energy efficiency opens the door to possible tax credits and better financing conditions.
A commitment to a sustainable built environment supports a simple yet impactful equation: Do better for the planet + create healthy and productive environments for tenants and their employees = sound and sustainable value for building investors.
As the value of this equation continues to play out in communities around the globe, one thing is clear: the future is looking greener than ever.
About the author: Anna Murray is Vice President of Sustainability at Bentall Kennedy, a Sun Life Investment Management company, one of the largest global real estate investment advisors and one of North America’s foremost providers of real estate services.