The benefits for stakeholders
Research indicates that the inclusion of sustainability elements in so-called ‘green buildings’ can generate benefits for a range of property stakeholders across various stages in property lifecycles.
A report by the World Green Building Council (2013) has looked at studies that investigate such benefits (see diagram below). They may include, but are not limited to, the following:
For property occupiers:
- superior environmental and social performance can provide reputational benefits and cost savings linked to efficiency gains. When buildings are better designed, staff may be more satisfied, improving staff productivity and staff retention, while reducing absenteeism rates.
For property investors:
- superior performance may generate higher rents and sale prices compared to non-green buildings, attract and retain better tenants and provide reputational benefits overall.
Benefits of green buildings. © The Business Case for Green Building, World Green Building Council, 2013.
In the longer term, superior Environmental Social Governance performance (see previous Step) can also reduce exposure to risks associated with poor sustainability performance. Such risks can include rising energy costs and the effects of climate change, including a higher risk of exposure to floods or droughts and extreme weather events.
Overall, the integration of sustainable development issues in real estate markets had led to shifts towards more responsible corporate practices. There is still much work to be done to make sure that sustainable development principles are addressed across all property types, particularly in ageing existing buildings. This creates significant new opportunities across the property industry, which continues to focus on activities and services that bring together these financial, environmental and social values.
References and further reading
- World Green Building Council. (2013). The Business Case for Green Buildings - A Review of the Costs and Benefits for Developers, Investors and Occupants. World Green Building Council.
© HBS and RREF