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The Key Ingredient

Corporate America is finally recognizing that profitability and environmental stewardship are compatible goals.

January 2013
Courtesy Toyota
Despite the irony of an automobile company claiming to be "green," Toyota has 26 dealerships and 11 corporate facilities with various levels of LEED certification. In addition to pursuing more environmentally friendly automobiles, the company employs a 3R (reduce, reuse, recycle) policy at manufacturing facilities.The LEED Platinum-certified Toyota showroom and dealership in San Francisco (left) includes photovoltaic panels and a recycled-aluminum shell.

Sustainability has gone from an environmental imperative to a corporate business strategy in less than a decade, but the actual benefits of that transformation are not well documented. To get a handle on the question, it's worth taking a look at the larger picture. What progress have U.S. corporations made to reduce the carbon footprint of their real-estate portfolios as a whole?

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There is no shortage of data to work from. The U.S. Department of Energy's Office of Energy Efficiency and Renewable Energy tracks energy-related information for residential and commercial buildings and publishes it in the Buildings Energy Data Book. It confirms that "commercial buildings represent just under one-fifth of U.S. energy consumption, with office space, retail space, and educational facilities representing about half of commercial-sector energy consumption."

Despite the fact that, according to the Environmental Protection Agency, U.S. emissions of greenhouse gases overall declined by 9 percent between 2007 and 2009 because of the recession, commercial energy consumption grew by a startling 69 percent between 1980 and 2009.

Data and statistics, while critical to appraising the country's energy consumption, present a distant view of the built environment. A closer look is revealed in the 2012 Greening of Corporate America report, a research study focusing on corporate America conducted by Siemens, the global clean-energy and efficient-infrastructure conglomerate, in collaboration with McGraw-Hill Construction (GreenSource's parent company). The study reveals that a majority of U.S. corporations have integrated sustainability into their standard business practices, a dramatic rise since Siemens and McGraw-Hill conducted their first study in 2006. Other key findings include executives' expectations of returns on their investments in the form of reduced operational costs and social and health benefits. More important, the study reveals that firms committed to the highest level of sustainable practices are requiring their suppliers to support those efforts with their own initiatives.

A still closer look offers anecdotal evidence that there is a variety of ways individual companies are becoming role models for corporate America. Phil Maguire, the co-owner of Maguire Automotive, a chain of car dealerships based in Ithaca, New York, understands the value of running an environmentally responsible business. Last May one of his dealerships, which sells Toyota and other brands, earned a LEED Platinum rating. The 80,000-square-foot dealership reuses rainwater to wash cars and generates 20 percent of its power from rooftop solar panels. "When you add all these things together, it's a no-brainer," says Maguire.

LEED isn't the only rating system that companies are using, but it is the most popular of those that address sustainability in a comprehensive way. Energy Star, overseen by the Environmental Protection Agency, is used more widely but focuses only on energy. Less widely used is Green Globes, which began in Canada and has not made many inroads in the U.S.

Boeing, the world's largest aerospace company, has five LEED-certified facilities, totaling 1.5 million square feet. Citi, the financial-services giant, has 44 LEED-certified branches, according to the U.S. Green Building Council (USGBC). One Main Financial (formerly CitiFinancial) has 125 LEED-certified locations; TD Ameritrade has 72. Bank of America has about 30 LEED-certified branches, and its headquarters at One Bryant Park in Manhattan is a high-profile sustainability landmark, despite its high energy use.

Pittsburgh-based PNC Financial Services Group boasts the most green-certified new construction of any company in the world, with a portfolio of over 100 green buildings. In 2002, the company became the first major U.S. bank to apply green-building standards to all newly constructed or renovated retail-branch offices. In 2007, PNC Bank celebrated its success by trademarking the term "Green Branch." In 2011 the company announced plans to build the Tower at PNC Plaza, a 33-story, 800,000-square-foot high-rise that will exceed LEED Platinum performance. In addition to the typical water- and energy-conservation strategies, the tower, designed by Gensler, will join a handful of tall commercial buildings with natural ventilation.

The USGBC supports LEED certification of large real-estate portfolios—corporate, institutional, and government—through its Volume Certification program, which reduces redundant paperwork by allowing organizations to identify credits that are common to a group of buildings and get them all approved in advance. Some organizations have taken that format a step further, using LEED as a green measuring stick for their entire portfolios, including many buildings that might never apply for certification. Vornado Realty Trust and Google are among the pilot participants in this Portfolio Partnership Program, which helps establish green practices by setting company-wide goals and subjecting them to regular reporting requirements. Among a number of services that support portfolio-wide performance tracking is CarbonSystems, a decade-old company offering cloud-based software that lets clients closely monitor their energy use in offices via submetering and report their consumption. "The question is, what is it going to take to get this critical mass moving, so that more property owners and more tenants are tracking their energy use to tackle climate change?" says Rudi Miklosvary, CarbonSystems' vice president of technology. Using CarbonSystems technology, Vornado offers tenant submetering in all 20 of its New York office buildings.

The 10-property Element chain from Starwood Hotels has rooms that feature dispensers for shampoo, not plastic bottles; carpets made of 100 percent recycled materials; and recycling bins for plastic, paper, and glass. Still, recognizing perhaps that guests on vacation might balk at more radical design changes, hotels are focusing on the businesses that serve them, making sure, for example, that the laundry service that cleans the sheets deploys green technology, says Pete Dordick, a vice president at Jones Lang Lasalle (JLL), the real estate firm, who works with many hotel clients. "One of the places we think there is low-hanging fruit, which may not be obvious, is their supply chain," he says.

Garth Rosenberger, a member of Toyota's LEED dealer team, which has helped three dealerships achieve Platinum status, recognizes that makeovers can't be too pricey. "The dealer has to see the benefits rather quickly," he says. And even though it is the environment that will ultimately benefit, the businesses' bottom line can, too. "What we are trying to do is to make the dealers more efficient," Rosenberger says, in words that could apply to any of these landlords and developers, "so they can become better businesspeople."

C.J. Hughes, a contributing editor at Architectural Record,writes about practice, design, and industry trends.

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An earlier version of this article stated the wrong title of the "2012 Greening of Corporate America" report. 2013-02-01 18:16:16 EST
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