Green's ROI is stupendous, but you can't put it on paper

Posted by tED magazine on Tuesday, December 27, 2011

By Joe Salimando

If you hear “green is dead,” ignore it. Smart people who own/operate buildings already know that green pays…BIG.

Put solar, wind, and The Smart Grid over to one side. Your business sells stuff for use in buildings; you can help make buildings greener.

Unfortunately, total return-on-investment can’t be quantified. But green building ROI is valued out there – buyers have seen it. So: Don’t restrict yourself to talking about electricity savings!

That’s not where the BIG return lies.

Documentary evidence

Studies of green buildings show that things like better lighting are very important to building occupants, along with daylighting, air quality, personal control of area lighting and temperature/ventilation, and more.

Studies have shown:

• Students (all levels) learn better in green schools. Credit is given to the building’s ambiance. See this resource page, “impact of green schools on learning.” And check out this abstract!
• Patients in hospitals heal faster in a green building as compared with a standard unimproved medical facility. The data show a 2-day advantage.  See (just one example) this "Design for Health” document.
• Most importantly: Workers are more productive in a green building, the amount of sick time they use decreases, too. See this 2009 paper and this from 2010; there’s lots more out there.

For electrical distributors it’s important to realize: It’s not energy-efficient lighting in this part of the real ROI. No – it is better-quality lighting.

Benefits from happier, healthier workers dwarf electric-bill shavings. Unfortunately, the utility presents that bill every month; productivity gains are almost impossible to quantify. More here.

See also the “occupant satisfaction, health & productivity” section of the USGBC’s research page.

Above: From a 2010 paper, Effects of Green Buildings on Employee Health and Productivity, 4-page PDF.

Sample calculation

Say a building owner spends $500,000 to redo the lighting. The electricity bill drops by 40%; the payback is 2.5 years.

But go down another path: Raise the productivity of people working in that structure by just 1% -- and you’ve produced benefits in excess of the initial investment in Year One.

Where do productivity gains show up? They might, for example, reduce the need to hire some full-time and/or part-time workers. How do you prove that, without better lighting, the company(ies) in the building would need to hire more people?

If you’re debating this, you’re going to lose. But building owners who have “gone green” don’t need a debate – they’ve experienced green-building benefits that don’t show up on precise electricity-bill ROI analyses.  

That’s why “green building” is not going away. The customer is pre-sold on the concept, based on real-world results; more here – but you’ll find this a common thought in almost any building or real-estate publication or website.

For what’s happening in the real world, browse the Green Blog posted (with frequent contributions from various staffers) by Jones Lang Lasalle.

What this means for electrical distributors: “Green building” means higher sales for your company. Perhaps alongside discussions of energy ROI and paybacks, you might find time to delve into lighting quality improvements, too.