SR Inc. to Convene Corporate/Commercial Real Estate Executives and Drive an Industry Closer to Greater Sustainability

November 12, 2011

The Sustainability Roundtable, Inc. (SR Inc.), the for-profit, shared cost research and consulting firm will bring together corporate/commercial real estate executives and sustainability professionals who represent over 60 member-client organizations at SR Inc.’s Third Annual Summit entitled, “The Change Driving Sustainability” on November 30th and December 1st at the St. Regis Hotel in Washington D.C.

This invitation only two-day event will feature: sustainability excellence award winners; presentations and case studies of SR Inc.’s 2011 Research Program; panel discussions with Federal agency representatives; and, facilitated sessions to develop SR Inc.’s 2012 Research Program.

Management Best Practice Sessions will include:

Portfolio-wide Sustainability Strategies: What strategies do Real Estate Executives use to resource and create sustainable value. (Includes Innovative Finance for Energy Efficiency)

Benchmarking Sustainability: What sustainability KPIs should Leaders adopt and what are the relevant performance benchmarks.

Sustainable Leased Space: How Leaders move to more sustainable leased space? How Tenants and Landlords systematically implement green leases and what provisions in RFPs, LOIs and Leases are used.

Alternative Workplace Strategies: What AWS strategies are successfully adopted to increase productivity and how can landlord’s best respond.

Working with the Federal Government: What are the best sustainability resources available within the Federal Government and how can Real Estate Executives partner with them.

The collaboration of SR Inc.’s member-clients supported by SR Inc.’s analysts, researchers, consultants and advisors is rapidly driving the real estate industry toward greater sustainability with breakthrough management best practices about ‘what works’ to apply the principles of sustainable real estate strategies across a portfolio that reduce operating expenses/occupancy costs; enhance enterprise/asset value; and align with organizations’ commitment to the environment.

If you would like to learn more about SR Inc.’s Annual Summit III or how SR Inc.’s resources and implementation guidance could help you drive your organization closer to sustainability, contact SR Inc.’s Larry Simpson, Executive Vice President – Advisory Services at larrysimpson@sustainround.com.

(The author is Larry Simpson, Executive Vice President, Advisory Services, Sustainability Roundtable, Inc. Additional posts can be found in SR Inc.’s Forum found at http://www.sustainround.com/aboutst/blog/)

 

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It’s not Rocket Science or Brain Surgery, its Corporate Real Estate Budgeting for Greater Sustainable Outcomes

August 22, 2011

Summertime, right? Time for vacation with family and to regroup before the blur of activity in the post-Labor Day fourth quarter? Wrong.

For most of you, the month of August is about hungering down in a conference room converted, “war room” with co-workers crunching numbers to prepare your real estate budget for departmental and corporate approval.

As you know, the budgeting season can be a tedious process to track down information, project internal charge-back costs to offset expenses, calculate macro interest rates, collect data from various systems and sources, and project/reconcile budget-to-actuals.

But, you don’t have to go visit a rocket scientist or ask a brain surgeon to know we are still amidst difficult financial times for most companies and budgeting is getting more and more difficult. The challenges you face are how to reduce operating expenses and enhance asset/enterprise value. But, now you’re being asked more and more to align the real estate portfolio with corporate environmental goals while achieving an acceptable rate of return.

How are you going to do find monies in your budget to create a sustainability strategy with so much less? The Sustainability Roundtable, Inc. (SR Inc.) and their most recent research just might have some of the answers.

SR Inc., in their report, “Allocating Resources for Sustainable Outcomes” found that:

  • Sustainability upgrades can have a substantial impact on the enterprise bottom-line to reduce operating and maintenance costs, mitigate carbon impact, improve employee productivity and increase asset value.
  • Capital allocations to improve indoor environmental quality can be more cost-effective and create greater enterprise value than energy conservation and efficiency investments.
  • Determining the relevant metrics and qualifying some sustainability key performance indicators (KPI) is difficult but methods are emerging measure intangible benefits.
  • Base financial models such as simple payback and ROI are inadequate to assess the real costs and benefits of most sustainability projects.
  • Energy performance can be benchmarked, monitored and evaluated, and therefore energy efficiency upgrades are high-priority for innovative finance programs.

But, you don’t own all of your facilities and have little control on the pass through expenses from your landlords in your current lease. SR Inc. has conducted some breakthrough research in a report entitled, “More Sustainable Leased Space,” where the adoption of ‘green lease’ language and other measures can help you achieve greater sustainability and reduce occupancy expenses. The research found:

  • To overcome conflicting priorities and the barriers that hinder the move to more sustainable leased space, leading companies develop a strong business case aligned with corporate goals, conduct total lifecycle accounting, adopt “green” leases, and gather data for sustainability KPIs to benchmark internally and externally.
  • Many corporate tenants pursue LEED-CI or BREEAM interiors to reinforce credibility, provide brand recognition and engage employees/clients. To avoid administrative burdens of formal certification but still obtain the benefits, some choose to ‘design to LEED-CI’ but not certify.
  • To achieve cost-effective sustainable leased space and certification, CRE leaders give preference to those buildings that are ENERGY STAR rated or whose landlord has demonstrated a commitment to sustainability.

SR Inc.’s Vice President of Research and Consulting, Irina Mladenova claims, “overestimating certification costs and setting unrealistically high hurdle rates based on a simple payback analysis are typically the biggest barriers in the move towards more sustainable leased space. When real estate executives hire consultants to lower the documentation and filing cost but do not overpay them and when a life-cycle cost analysis rather than a simple payback analysis is used to establish hurdle rates, the additional costs to achieving green building certification is in fact far less (0-2%) than many real estate professionals assume. And, there is an increasing recognition that green buildings result in significant, yet hard to quantify, health and productivity benefits.”

The challenge to find monies in your budget for sustainable real estate is no longer a cost benefit trade-off. The budgeting process may be arduous but, there is clear evidence that you can achieve a more sustainable real estate portfolio by allocating resources where they will have the greatest impact and implement initiatives that are more about changing behavior than being capital intensive. And, besides, budgeting for sustainable outcomes is a heck of lot easier than rocket science and brain surgery.

If you would like to learn more about how you can create a budget with greater sustainable outcomes you can download SR Inc.’s research: “More Sustainable Leased Space,” (http://sustainround.com/research/leasedSpace.php);  and for a copy of “Allocating Resources for Sustainable Outcomes” please contact Larry Simpson, EVP of Advisory Services at larrysimpson@sustainround.com.

(The author is Larry Simpson, Executive Vice President, Sustainability Roundtable, Inc.  who can be reached at larrysimpson@sustainround.com. Additional posts can be found in SR Inc.’s Forum found at http://www.sustainround.com/forum/ )


Pick the low hanging fruit? How about the watermelons lying on the floor? — Partnering with Utilities to Reduce Energy Costs

July 28, 2011

When companies develop a sustainability strategy to reduce operating expenses, among the first areas they address is the “low hanging fruit” of energy efficiency as it represents one of the largest cost buckets behind rent or debt service.

However, many or most organizations may not think about “picking up the watermelons lying on the floor” by partnering with their utility company to create an energy plan. Because power providers are incented by federal regulators they are required to extend rebates and provide cost saving programs as part of their service to rate payers.

In a Member-Only meeting of the Sustainability Roundtable, Inc., New England-based National Grid was featured to share some information about programs they offer to their customers and make recommendations that all organizations make take advantage of. They cite that partnering with a utility provider to develop a long-term strategic energy plan includes:

  • New initiative to meet aggressive energy saving goals
  • Targets top quartile customers
  • Sets long-term and high energy saving goals (road-map) for customers rather than ‘short-term’ ad-hoc upgrades
  • Create (or modify) an organizational shift to how energy efficiency decisions are made within a large organization
  • A financial model that enables a re-investment based cash flow positive structure for energy efficiency upgrades

Their presentation highlighted that, in addition to ‘triple bottom line’ energy planning, there are several other key areas they recommend organizations to address:

Financial – incentives, on-bill financing, investment criteria

Technical – benchmarking, energy use data, coordination with LEED standards

Operational – staff training, building certification, O&M guidelines

Other “green” measures – indoor air quality, day lighting, water savings, GHG tracking, productivity studies

The presenter during the program was National Grid’s Michael McAteer who said, “a significant opportunity exists for customers to maximize the technical expertise and achievable energy savings potential in their business environments by partnering with their utility. Adopting a comprehensive data driven approach to reduce operating costs with support from utilities is a smart move and provides valuable dividends to customers.”

He suggested a process that you and your utility company could take might include:

  • Establish contact with top management of large customers and the utility company
  • Identify energy goals, financial criteria, and sign memo of understanding
  • Identify/prioritize projects
  • Benchmark existing use
  • Implement measures and incentive payments
  • Evaluate progress
  • Develop long-term road map for the entire portfolio through “collaborative effort”
  • Train operations staff, create case studies, and assist other studies (water savings, productivity, LEED etc.)

The key takeaways the SR Inc. program highlighted were:

  • Leading companies that develop and implement portfolio-wide sustainability strategies prioritize scalable best practices in energy efficiency and energy cost reduction, and seek to maximize innovative financing, including utility benefits.
  • Utilities are responding to market demand for a portfolio approach by looking beyond buildings, building systems, and technologies for opportunities to assist customers to reduce demand and consumption.
  • The portfolio-wide approach enables customers and utilities to partner at a strategic level, and achieve greater reduction and savings a lower cost and in less time than a fragmented ‘Energy Conservation Measure’ or technology rebate approach.

As you embark on the green to gold treasure hunt or search for the proverbial ‘low hanging fruit’, be sure to reach out to your energy provider who is ready to help and can play an important role to address energy cost, save money and pick up some ‘watermelons.’

If you would like to receive a copy of National Grid’s presentation or to learn more about how you might forge a strategic partnership with your utility company, please contact me at larrysimpson@sustainround.com.

(The author is Larry Simpson, Executive Vice President, Sustainability Roundtable, Inc.  who can be reached at larrysimpson@sustainround.com. Additional posts can be found in SR Inc.’s Forum found at http://www.sustainround.com/forum/ )


Corporate/Investment Real Estate Professionals Focus on the Deployment of Enterprise Energy and Carbon Accounting Software

May 9, 2011

The real estate footprint boundaries of large companies and real estate owners have expanded, subsequently the challenge to measure, manage, report and reduce energy and carbon data efficiently and accurately to support portfolio-wide sustainability strategies have increased.

This challenge has immediate and particularized relevance for the users of corporate real estate, the owners of corporate real estate, and investor-advisors invested in corporate real estate. On April 21st, the Sustainability Roundtable, Inc. (SR Inc.) released a management best practices research report entitled “Deploying Enterprise Energy and Carbon Accounting (EECA) Software,” that provides practical guidance on software selection and implementation. To access the report, GO TO http://sustainround.com/research/EECA.php

SR Inc. clients who provided case studies include Adobe, Autodesk, Intuit, and Brookfield Properties. Among other findings, the report highlights that:

  • The key drivers for deploying EECA software today to manage GHG emissions include cost control, disclosure requests, brand enhancement, and new, superior technological solutions.
  • The deployment of EECA has significant benefits over the use of spreadsheets and complements other enterprise systems.
  • Careful initial planning and decision-making throughout the three deployment phases (selection, implementation, utilization) can reduce risks and maximize the benefits of EECA.
  • The use of EECA as a management tool first, and reporting tool second, enhances sustainable value creation across the enterprise.

Over the past three years, the market for software to manage sustainability metrics and produce management, regulatory, and voluntary reports has exploded, with over 200 vendors offering products of varying maturity. Since real estate is one of the leading sources of corporate GHG emissions, primarily due to purchased energy use, one software class—known as ‘enterprise energy and carbon accounting’ (EECA) — has become the preferred approach for priority sustainability data management and reporting.

While some research is available on the EECA market size, market share and characteristics of the leading vendors and products, there has been little decision-support for real estate executives on the selection, procurement, and implementation of EECA software until the SR Inc. report was released.

Michael Gresty, SR Inc.’s Executive Vice President of Research and Consulting, observed that “while numerous companies have already deployed EECA solutions, many more have not, and are looking for guidance about why and how to do so from the early adopters. Our client-sourced best practice report includes strictly vendor-neutral step-by-step guidance on deployment by corporate real estate executives.”

Enterprise-wide information systems have become the fabric in today’s corporate/investor landscape but, with the emergence on the importance to track and report carbon emissions, manage sustainability initiatives and gauge success call for a new class of software – enterprise energy carbon accounting and SR Inc.’s guidance on how to deploy it successfully.

How does your organization track, measure and report its’ carbon emissions and sustainability initiatives?

(The post was originally published in the Sustainability Roundtable’s blog found at http://www.sustainround.com/forum/ and was republished with permission by the author, Larry Simpson, Executive Vice President, Sustainability Roundtable, Inc.)


“Blue is the New Green: Water Scarcity and Efficiency Takes a More Prominent Role in Greater Sustainability”

April 13, 2011

In recent years, “green” has become a dominant theme in the corporate and social lexicon, and a critical business driver in many companies’ overall strategy.

Senior level executives publically proclaim the “green” high ground as a corporate philosophy while middle management supports the organizational objective with “green” real estate strategies, many of which tend to be focused on energy efficiency because it has the greatest potential for savings.

More recently, water scarcity and associated rising costs have become critical issues bordering on a crisis, as a survey of recent headlines attests: “metro eyes evening lawn sprinkling ban to conserve water,” “water shortage warning issued for 16 Florida counties,” “Pasadena will face water shortage emergency this month,” and “spring watering restrictions now in effect.”

The Sustainability Roundtable, Inc. (SR Inc.) recently released a client briefing with the following key takeaways:

  • The five market drivers for water efficiency in corporate real estate portfolios are rising costs, increasing water scarcity, reputational risk, green building certification, and investor concerns
  • Domestic use, heating and cooling, landscape, and kitchens are the four main categories of water demand in commercial buildings
  • Water foot printing is important to evaluate both direct and indirect water use
  • Mapping flows and measuring water consumption using metering, sub-metering, and estimation are essential to benchmarking and setting goals

Water scarcity has increased average water rates of 310% over the past 25 years compared to a 207% increase in the CPI. In many areas, water consumption charges do not yet reflect the true cost of water, but they are rising quickly because subsidies that kept them artificially low are being phased out. For instance, NYC has raised water rates 12.9% for three years in a row, and plans to do so again in 2011. Water districts are raising prices to cover the full cost of water treatment, storage, and delivery. As water scarcity intensifies and water rates increase so does the pressure for governments to mandate efficiency.

Companies that utilize LEED standards on new construction and existing building retrofits can reduce water consumption by 20-50%. The LEED certification guidelines include a pre-requisite for water reduction (20%), water efficient landscaping, innovative wastewater technologies, water performance measurement and cooling tower management.

Water scarcity and increasing costs are getting attention from investors who are interested to learn how companies manage their water use. In 2011, for the second year running, the Climate Disclosure Project is requesting information on the risks and opportunities companies face in relation to water on behalf of 354 institutional investors with assets of $43 trillion. Water is sometimes called “the new carbon,” but while CO2 emissions are only priced in some markets, water costs and risks are increasing in all markets.

Most companies already focus on energy efficiency, but water and energy are interconnected. Efficient use of water reduces on-site energy use, as well as the energy required to supply fresh water and treat wastewater and recycle water. Power plants which produce electrical power use water for cooling or to turn turbines. By extension, water use causes carbon emissions because of the energy required to source and pump it. The Environmental Protection Agency reports that about 8% of US energy demand goes to processing and moving water.

Storm water is typically a problem which requires expensive infrastructure both on-site and off-site to solve. Leading corporate real estate executives are seeking ways to re-assess the management of storm water to capture its value and reduce capital as well as operating costs.

As water is beginning to play an increasingly important part of an overall sustainability strategy, measuring and auditing water use is essential to create a baseline and to benchmark. Common corporate water efficiency goals are incremental 2-3% annual improvements as a reduction in the volume of water used by area (gallons per square foot), but some organizations are targeting 20-30% 1-year goals.

An integrated approach to implement water efficiency includes:

  • potable water use reduction – low-flow fixtures, cooling towers, leak repair, xeriscaping;
  • water recycling – onsite water recycling and rainwater harvesting; and,
  • water diversion – incorporating storm water management for re-use will yield optimal results to address the increasing water crisis.

Michael Gresty, SR Inc.’s Executive Vice President of Research and Consulting, comments that “many corporate real estate executives remember the poor quality of the first generation of more efficient low flow fixtures, and associate water efficiency with thoem and associated municipal mandates that had low or no payback. Today, there are numerous solutions on the market that have been thoroughly tested and work extremely well. Moreover, while bathroom fixture replacement is important, our research shows that the biggest gains can often be in leak detection and repair, cooling tower efficiency, and non-potable irrigation or xeriscaping, all of which can both be easier and less costly to implement.” 

The operational market drivers of rising costs and increasing scarcity, in concert with strategic drivers of reputational risk, green building certification, and investor interests are compelling leading corporate real estate executives to create value through water efficiency.  To achieve this, industry best practices are to:

  • Meter and measure water use across your portfolio to establish baselines
  • Benchmark using ENERGY STAR
  • Track changes in water to identify leaks and other anomalies
  • Focus on preventive maintenance of cooling towers (responsible for a high percentage of water consumed) and improve fixture efficiency
  • Implement green roofs, bio-swales, and other solutions to manage storm water for re-use (irrigation or on-site filtration)

Clearly, “blue has become the new green” due to the importance of water conservation to address operating cost reduction and as an integral part of a successful “green” sustainability strategy.

(The post was originally published in the Sustainability Roundtable’s blog found at http://www.sustainround.com/forum/ and was republished with permission by the author, Larry Simpson, Executive Vice President, Sustainability Roundtable, Inc.)


Creating Enterprise Value through Sustainable Real Estate Strategies

February 3, 2011

Sustainable corporate real estate strategies:

– reduce operational and occupancy costs through energy efficiency and space optimization, AND

– avoid customer, employee, environmental and regulatory risk, AND

– align portfolio management with an organization’s overall objectives.

Sustainable development, which has been defined as “meeting the needs of the present without compromising the ability of future generations to meet their own needs,” is a policy objective and global megatrend that companies must align with to create enterprise value.

The hallmark of corporate sustainability excellence is inclusion in the Dow Jones Sustainability Index (DJSI). The DJSI recognizes that “corporate sustainability is attractive to investors because it aims to increase long-term shareholder value. Since corporate sustainability performance can now be financially quantified, they now have an investable corporate sustainability concept. Second, sustainability leaders are increasingly expected to show superior performance and favorable risk/return profiles. A growing number of investors are convinced that sustainability is a catalyst for enlightened and disciplined management, and thus, a crucial success factor.”

DJSI recognition does not necessarily require a sustainable corporate real estate strategy, but those organizations that proactively incorporate the principles of sustainability into managing their portfolio of leased and owned facilities can make significant contributions to their organization’s overall enhanced value.

The challenge for the corporate real estate and facilities professional is made a bit easier when senior management fully embraces the principles of sustainability and is willing to make the necessary investment that achieves an acceptable internal rate of return. 

The way real estate strategies play a major role to create enterprise value is best highlighted in the Sustainability Roundtable, Inc.’s (SR Inc.) “2010 Corporate Real Estate Management Best Practice Guidebook” which reports the following best practices they originally researched from leading corporations:

  • Portfolio-wide sustainable real estate strategy is an essential component of a corporate response to the sustainability megatrend.
  • Leading real estate executives align with corporate strategy to establish a vision of sustainable real estate; implement effective governance; guidance; short-, medium- and long- term goals; and demand accountability for results.
  • Executives can create sustainable efficiency and value by developing and implementing portfolio-wide initiatives to improve portfolio performance and increase asset value.

Going forward, innovative real estate professionals are being increasingly recognized for taking the lead to exceed goals. To be successful they must implement proven sustainable real estate strategies that: compliment the corporate vision; anticipate long-term environmental impact; meet shareholder demand for financial returns; foster customer loyalty for company products and services; set high standards for the corporate code of conduct; and, maintain employee affinity and job satisfaction.

Michael Gresty, SR Inc’s EVP of Research and Consulting, observes that “today, the corporate real estate function is often by default the internal champion of sustainability initiatives. CRE teams can now do more to secure C-suite buy-in that enables them to maximize value creation rather than simply minimize costs. CRE is experiencing a metamorphosis to become a new source of value and risk management.”

Sustainability is no longer just “a good idea” or “the right thing to do,” sustainability is now an investable strategy as sustainable real estate portfolio management has become an important element in creating benefits for companies and their investors. As the sustainable enterprise value creation dynamic expands, it will have an even more profound effect on improving individual and corporate financial performance, the global economy, and environmental stewardship.

(The post was originally published in the Sustainability Roundtable’s blog found at http://www.sustainround.com/forum/SOR/ and was republished with permission by the author, Larry Simpson, Executive Vice President, Sustainability Roundtable, Inc.)


Publisher of CRE3 Forum Transitions to New Position with Sustainability Roundtable Inc.

January 13, 2011

As follow-up to last week’s post I wanted to provide CRE3 readers with new contact details of my new role with Sustainability Roundtable Inc.

In transitioning into any new position, my first week has been “sipping water through a fire hose” mode but, the one thing that instantly sank in is that SR Inc. is at the ‘epicenter’ of advancing  industry best practices in operating sustainable facilities.

SR Inc. is a member driven research and consulting company that is well positioned to become an integral voice in helping corporate and governmental organizations gain valuable information in peer-to-peer interaction and deep domain research on how to operate their portfolio more efficiently by implementing the principles of sustainability. SR Inc. is helping a rapidly growing number of leading global companies and public agencies to: drive greater energy efficiency; resource productivity; use of renewables; and, sustainability across existing owned and leased real estate portfolios.

I encourage you to join SR Inc’s growing list of companies like Adobe Systems Inc., Autodesk, BC Hydro, BNY Mellon, Gensler, Harvard University, IBM, ING Clarion, Intuit, J.P. Morgan, McKesson, National Grid, National Institutes of Health, Oracle, UGL Unicco, Unum, USAA Real Estate Company, U. S. General Services Administration, Visa Inc. among others who are enjoying the resources available from SR Inc about bottom-line business benefits of sustainability real estate strategies/initiatives.

Blah, blah, blah…I apologize for the marketing smush but, the value propositions associated with being part of the SR Inc community are just too powerful to overlook and easy to understate their significance.

But, don’t take my word for it…read what current Members have to say:

“My team and I have been impressed by SR Inc’s impactful value-add regarding what works in more sustainable real estate world-wide; additional resources can only enhance their status as the “go-to” organization for sustainability research,” said Randy Smith, Vice President of Global Real Estate & Facilities at Oracle.

 Kevin Kampschroer, Director of the GSA’s Office of Federal High-Performance Green Buildings – responsible for enhancing performance in the government’s more than 300 million square feet of real estate – observed upon joining SR Inc.’s shared-cost service: “GSA welcomes participation with the diverse group of firms assembled to drive towards a sustainable, clean energy economy. As GSA itself pulls toward a zero environmental footprint, we are eager to share our experience, research and data, and to take advantage of the collaborative private-public interchange that the Sustainability Roundtable offers.”

My involvement with SR Inc has clearly validated earlier statements I’ve posted about sustainability in corporate real estate…”GREEN is the NEW BLACK.” I hope to hear from you soon about your interest to become a corporate member in this fast growing sustainable facilities movement.

For more information, please contact me at:

Larry Simpson
Executive Vice President
Sustainability Roundtable Inc.
Best Practices for More Sustainable Facilities
One Broadway, 14th Floor
Cambridge, MA 02142
617-682-3629 (office)
617-529-1970 (cell)
508-946-4750 (remote)
 
larrysimpson@sustainround.com
www.sustainround.com
SR Inc Thought Leadership: www.sustainround.com/forum/SOR/