<a href="https://www.greenlifestylemag.com.au/blogs/leon#">The Business of Green</a>

The Business of Green

Money matters in the green world, by Leon Gettler.

The business case for green buildings

sustainable building

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We all talk about cars and factories creating greenhouse gas emissions but one area many forget about is our workplaces and homes. The Green Building Council of Australia says that Australia's commercial and residential buildings are responsible for 23 per cent of the nation's greenhouse gas emissions.

The upshot? We need more green buildings to save the environment.

There is no doubt that green buildings are now a prerequisite for government agencies and big corporations. Developers tell me it’s now just about impossible to get a contract for these entities without planning for a sustainable building that might have features like to a co-generation plant (producing heat and power simultaneously), energy efficient lighting and upgraded bike racks - not to mention ensuring a cleaner, greener and less expensive office site.

The interesting part is new evidence suggesting that green buildings might actually make companies some money. A recent study, Doing Well Doing Good (PDF here), detailed rents and selling prices of buildings in the United States.

It found that buildings with a "green rating" were able to charge tenants three per cent more rent per square foot than otherwise identical buildings. Green buildings also sold for 16 per cent, and retrofitting a standard building into a green building would add to the selling price.

There is one obvious reason for the premium and it’s connected to the building's capacity to save energy and costs.

At the same time, we might be entering new territory here. As green buildings become more popular, new risks might emerge. A recent Harvard Law School studyPDF here, for example, found there might be legal risks.

Like, for example, delays in construction and more paperwork, design defects and, if the building doesn’t meet requirements, issues with insurance. It could also be a nightmare for contractors and subcontractors.

"Contractors and subcontractors risk liability stemming from a failure to deliver features required by contract, or from green-related construction defects and can, like design professionals, trigger warranty exclusions in insurance policies if particular sustainability outcomes are guaranteed,’" the study says.

"Tenants of green buildings risk that the structure will fail to meet expectations for improved worker health and productivity and for reduced utilities costs."

Despite the various risks, green buildings are worth developing, not just for the environment but for profit. But at the moment, it's only government agencies and corporations that are interested in them. Smaller and medium sized businesses are not taking to green buildings. For them, it’s too costly and if there are benefits, they say it’s too far down the track for small operators.

Given that small business is an engine room of the Australian economy, it’s a problem. The challenge is getting small and medium sized businesses to embrace green buildings.