Q: My company is planning a new clean manufacturing facility. What are the considerations in determining whether or not to recommend pursuing LEED certification?
A:With apologies to William Shakespeare:
To LEED or not to LEED, that is the question.
Whether ‘tis nobler in the mind to suffer
The extra work of seeking LEED certification,
In order to take arms against a sea of environmental troubles,
And by opposing help end them.
The central question
While neither the Bard (nor Hamlet) ever lost any sleep over the questions of operating costs, climate change, corporate social responsibility, or sustainability, today’s facilities professional must address these issues. Whether or not to seek LEED certification (or certification through any other sustainability program) is a question that goes well beyond the facilities engineering department.
Has green gone mainstream?
Building green has grown exponentially since 2005 when, across all sectors, it was valued at $10 billion. In 2012, it’s estimated to have reached $85 billion, according to the recently released 2013 Dodge Construction Green Outlook by McGraw-Hill Construction (MHC). The report goes on to project that green construction will exceed $200 billion by 2016. They also reported that by 2015, new green construction is being planned by 63% of surveyed firms globally.
LEED: a brief background
LEED (Leadership in Energy and Environmental Design) is a voluntary program that provides third-party certification of “green buildings” through the U.S. Green Building Council (USGBC), a 501(c)(3) nonprofit organization (http://new.usgbc.org). Certification is available to the full spectrum of building types, from residences to office buildings, educational and healthcare facilities—to clean manufacturing plants.
The certification process focuses not only on materials, but also methods of construction, operation, and maintenance . (For a detailed case study profiling efforts to obtain a LEED Gold certification for a new clean manufacturing facility, see Controlled Environments magazine: www.cemag.us/article/winning-gold.)
According to the USGBC website, LEED certified projects can be found in more than 135 countries, with more than 50% of the LEED registered square footage located outside the United States. The USGBC states that LEED is the most widely used green building certification program in the world, with 50,000 projects comprising more than 8.9 billion ft2.
Other programs
While the USGBC LEED certification program may be the most globally recognized, it’s not the only game in town. Examples of other established U.S.-based programs include Green Globes (www.greenglobes.com), which bills itself as “the practical building rating system” that “delivers an online assessment protocol, rating system, and guidance for green building design, operation, and management.” Green Globes claims their program is “interactive, flexible, and affordable, and provides market recognition of a building’s environmental attributes through third-party verification.”
The U.S. Government “ENERGY STAR” initiative has a program focused on industry: http://www.energystar.gov/index.cfm?c=industry.bus_industry. Their website provides a variety of resources as well as recognition programs.
Other countries offer nationally based green building resource and recognition programs as well, so if your capital plans including building outside the U.S., take the time to research which option would best serve your company’s interests.
Building green — motivations that move its adoption
Economic factors, including improvements to a company’s bottom line, were key motivating factors named by respondents to the MHC survey. Reduced operating and energy costs, along with client and shareholder expectations, were cited by executives. In contrast, the 2008 top reason to build green was to do “the right thing.”
Among motivating factors to build green, MHC states that reducing energy (72% of respondents) and water (25% of respondents) consumption were key considerations. That same report found, however, that while 29% of firms cited occupant health as a motivating factor in their 2008 survey, 55% of surveyed firms in 2012 noted health as a key consideration.
While the economic downturn may have contributed to a seismic shift in motivation, it hasn’t dampened the practical pursuit of greener buildings.
MHC further reports, “81% of executive leaders in corporate America believe the public expects them to engage in sustainability—one of the key forces driving corporations to institutionalize some green efforts. 30% of senior executive officers report that they are greening two-thirds of the buildings in their portfolio—with 47% expecting to do so by 2015.”
In another survey, Turner Construction took the pulse of 718 U.S. executives. Their Green Building Market Barometer states that only 37% considered it very important to reduce a building’s carbon footprint. Again, economic considerations ruled. Regardless, 51% of firms globally say they expect about two-thirds of their projects to be green by 2015.
The cost to build green
When considering the cost to build green, it’s important to consider total project cost, including operating costs. While the increase in construction costs will vary greatly by building type and green building strategies employed, the critical bottom line numbers are ROI, including savings in operations, and maintenance costs, as well as projected payback.
McGraw Hill reports that generally, “For new green building projects, firms report median operating cost savings of 8% over one year and 15% over five years, as well as increased building values of 7% (according to design and construction firms) and higher asset valuation of 5% (according to building owners).”
The report goes on to say, “For green retrofits, operating savings are higher than for new buildings with operating costs reported to decrease by 9% over one year and 13% over five years. Asset valuation is also expected to increase, though at more moderate levels than for new green buildings—design and construction professionals expect 5% increased building value from green retrofits, and owners expect higher asset valuation of 4%. For green projects, payback on efforts is expected within eight years for new projects and seven years for retrofit/renovation work.”
The payback period for the LEED Gold certified GE Healthcare clean manufacturing facility in the case study cited above was significantly shorter, clocking in at approximately two years.
How’s LEED certification trending?
According to the Turner Construction Company’s Green Building Market Barometer: “Although the vast majority of companies remain committed to green buildings, the percentage of executives who thought it was extremely or very likely that their company would seek LEED certification if they constructed a green building was only 48%, down from 53% in the 2010 survey and 61% in the 2008 survey. Among executives who said their companies were not likely to seek LEED certification, the most important reasons cited were the cost of the certification process (82%), staff time required (79%), time required for the process (75%), and the overall perceived difficulty of the process (74%). It is apparent that in the last four years many companies seem to have become more knowledgeable about the means and methods of designing and constructing green buildings and are less reliant on LEED as a checklist or a scorecard. This is indicated by the fact that 52% of executives who are not likely to seek LEED certification would prefer to use their own company’s green building standards. At the same time, 41% of executives thought it was at least somewhat likely that their companies would consider seeking certification under a rating system other than LEED if they constructed a green building. Of those executives who indicated they would consider another system, 63% said they would be extremely or very likely to consider seeking certification under ENERGY STAR, which again highlights the importance of energy efficiency. It should be noted that building owners may elect to certify under more than one rating system.”
Who gets a say? Who decides?
While the decision to build green has gained significant momentum for a variety of evolving reasons, the decision to seek third-party certification appears more muddled.
Any company contemplating LEED, or any other certification, needs to peel the onion and consider their motivations, as well as the perceived benefits they expect from third-party verification.
Here are ten key questions:
1. What tangible benefits do you expect from a certification program?
2. What’s the expected cost? The expected timeline?
3. Do you have the staff to manage and see the certification process through?
4. Do you anticipate disposing of the property or the business in the near future? As part of an acquisition or outright sale? Or do you anticipate retaining the asset? Is there a value to the certification in any of these scenarios?
5. How important to your company is the “brand value” of a third-party certification?
6. How much value would a third party certification hold for your clients or customers? For your investors? For your employees?
7. Are you a publicly traded company with significant expectations for your Corporate Social Responsibility (CSR) program?
8. Will the certification process assist in guiding the choices you must make during a building design and construction program?
9. How does the “C-suite” weigh in? How does your Investor Relations department feel? Legal? Corporate Communications? Human Resources?
10. If you pursue and obtain certification, what’s your plan to maximize its value to your business post-award?
In the end, “to LEED or not to LEED” is a question with answers distinct to every clean manufacturer who considers the option.
Richard Bilodeau’s 30-year career includes plant engineering positions in clean manufacturing. He has designed, operated, and supervised the construction of advanced technology facilities and engineered clean manufacturing facilities for lithium-ion batteries, medical devices, electronics, and pharmaceuticals. Contact: [email protected]
This article appeared in the March 2013 issue of Controlled Environments.
