Sustainable Buildings Part 1: The Pros of Going Green

This is part one of a two-part sustainable buildings series, covering what’s at stake when organizations decide to digitize and optimize their energy usage. Click here to read Sustainable Buildings Part 2: The Cons of Non-Compliance

The ‘pros’ behind converting your organization’s building to a more sustainable model are obvious. It’s the right thing to do. It’s the environmentally responsible thing to do. People will feel better about your building, your organization and your priorities.

There are also many, more tangible, benefits. Financial benefits.

Enter ESG

First coined in 2005, ESG is short for environmental, social, and corporate governance criteria. This is an innovative set of standards that investors use to assess and analyze companies they are considering investing in.

While the social and ethical criteria are also certainly important, today let’s focus on the environmental considerations investors take into account when looking at an organization.

When a company can demonstrate that its taking strides toward becoming more energy efficient and environmentally sensitive (for instance, automating adjustments and digitizing its energy management), investors are more likely to want to invest.

Some of these environmental criteria include:

  • A climate change strategy
  • Biodiversity
  • Water efficiency
  • Energy efficiency
  • Carbon intensity
  • Environmental management system

Investors also look at an organization’s product mix and will favor those that offer sustainable products.

Taxes and Tenants

And it’s not just the investors who reward sustainability-focused organizations. The U.S. Government and building tenants do too.

In 2008, as part of the Energy Improvement and Extension Act, a Section 45Q tax credit was implemented to incentivize organizations to reduce their carbon dioxide emissions and to support redeployment of carbon dioxide energy.  It’s since been expanded to include carbon oxide emissions. To qualify for the credit, the carbon oxide needs to have been slated to be released into the atmosphere if not for specific equipment installed by the organization. And the emissions must be measured at the point of capture as well as at the point of disposal.

To claim this tax credit, the emissions must be measured at the point of capture as well as at the point of disposal, injection, or other use.

If all of this can be proven, $12 to $50 per metric ton of carbon captured and sequestered will be credited.

Tenants, too, are big fans of organizations that prioritize sustainability.  When building tenants shop around for new space, more often they are inquiring if a building is certified green. Not only do they seek out buildings that are proven to be more energy efficient, with better air quality and more sustainable construction materials…they are willing to pay extra for it.

In 2021, global real estate leader JLL published a report that confirmed, for example, that “…the majority of Asia Pacific corporations are willing to pay a rental premium to lease sustainability-certified buildings in the future…with the majority paying a rental premium of 7-10%.”

With potential benefits like these, more organizations even more incentivized to “go green.” Being environmentally-focused isn’t just good for the earth – it’s good for your budget.