The Future of Real Estate: Greening Your Home & Community – World Inc. Style

By Bruce Piasecki, author of World Inc. with Mark Coleman

In this new century of social and environmental obligation and expectation – real estate is emerging as the canvas by which new portraits of sustainability are being painted. New age development companies are earning green as they paint the past into new shades of green.

Take for example British Land of London who is developing commercial properties in the UK that balance economic and social impacts from a life cycle perspective, Windmill Developments of Ottawa Ontario who is working to green the urban environment in Canada, and East West Partners of North Carolina who are building sustainable residential communities like their East 54 development at Chapel Hill which is LEED Certified by the U.S. Green Building Council. These developers are just a sample of firms now looking at how to green our homes, our cities and our communities. These firms are what we call social response capitalists – developing new products, services and business models around social needs.

Greener Products – Greener Profits
The revitalization of real-estate is front and center in this new century of social obligation. We are becoming smarter in deciding where we build our living space, what materials to use, how to energize our spaces, and how best to optimize resources and minimize waste. Building products companies are also capitalizing on the need for greener building materials.

Take for example Toronto based Norbord, a $1.3 billion international manufacture of wood products is manufacturing more sustainable building materials like oriented strand board, engineered wood products (I-joists) and medium density fiberboard. These products reduce wood use, minimize waste and provide other value-added benefits to builders and consumers. In the same industry, the Nashville, Tennessee based LP has developed a new and innovative energy saving building material called LP® TechShield® which is an aluminum foil material used as a radiant barrier minimizing heat gain in summer months and heat loss in winter months. The LP® TechShield® product saves consumes up to 20% on their total energy costs.

The greening of products also transcends the more fashionable side of style as well. Herman Miller for example manufacturers intelligently designed furniture that meet what is known as Cradle to Cradle certification. The firm is looking at greening their products from the design phase through end-of-life and everything in between including better packaging solutions (e.g., reducing waste and minimizing packaging materials). Many of Herman Miller’s products are designed to be recycled, emit little indoor air emissions, use low VOC paints, contribute to LEED certification for users, and are manufactured using environmentally benign processes. Herman Miller has 28 product lines spanning healthcare furniture, furniture accessories, seating, freestanding furniture, and furniture systems that have environmental attributes and can be applied to LEED credits. Based in Oakland California, Michelle Kaufmann Designs is pioneering design and manufacture of affordable and sustainable living buildings. With an eye toward entire living systems the firm incorporates eco-friendly materials (like non-toxic low VOC paints and formaldehyde-free cabinetry) and energy-efficiency into each modular home product it designs.

Norbord, LP, Herman Miller and Michelle Kaufmann Designs are greening their product portfolios because they see not only a market, but a long-term solution to remaining competitive and staying in business. These firms are some of the early leaders in greening the real-estate industry.

The Greening of Brownfield’s: Turning Past Liabilities into Future Assets
Thus far we’ve mentioned the greening of building products, buildings, homes and community developments. What’s also occurring is a revitalization of the land itself. Like the earth’s other natural resources – land is limited. Europe is especially sensitive to land resources because they have, like all other areas of the globe, fixed land and space by which to make real-estate decisions and investments. European countries and corporations are seeking means to revitalize land resources, particularly Brownfield’s, into more productive higher uses.

Like Europe, the U.S. has thousands of Brownfield sites. These scars of industrialization remind us that our economy has been built up through depletion of natural resources, containment of waste, and contamination of soil and groundwater. These scars, some visible, some naked to the eye, are also reminders that our prosperity has occurred not without environmental, economic and social costs. In some cases blighted properties have had very adverse impacts on the socio-environmental context of communities, often yielding ethical debate and political action. While the scars of our industrial past litter our lands, they can be healed and reconstructed with technology, new business models and with proper definition of future productive land use.

For the past decade AHC Group, Inc. has been researching, benchmarking and implementing strategies for large industrial firms to remediate past environmental liabilities. Our firm has worked with large transportation, chemical, oil, utility, consumer product, pharmaceutical and industrial manufacturing companies on discovering ways to optimize their clean-up of past liabilities while simultaneously identifying ways to bring those less productive properties into higher-valued real-estate. While technology, economic and environmental challenges impede fast transformation of remediation sites, innovative companies are beginning to find financial and social value in cleaning-up their legacy sites.

For example GM is studying new innovative technologies and approaches to restoring former industrial sites for redevelopment. And oil giant BP who is moving “beyond petroleum” is also moving “beyond pollution” by redeveloping past industrial sites. In fact BP won a US Environmental Protection Agency award for excellence in Brownfield redevelopment for the transformation of their former Casper, Wyoming refinery site into a 340 acre business park and recreational area. In our experience, every major industrial company is looking for opportunities to revitalize their real-estate assets. In 2005 BP spend more than $366 million worldwide on remediation projects. The firm’s remediation team manages a provision of more than $2.3 billion for future expenditures.

As these numbers show, real-estate clean-up, risk management and redevelopment is “big” business. As big industrials decommission facilities, expand into new markets, and realign their corporate strategy with a new era of social and environmental reporting, the best firms are discovering that real-estate revitalization goes hand in hand with long-term risk reduction and creating lasting shareholder value.

Financing Greener Communities
The organizations and companies driving greener growth in building products, buildings and real-estate are not alone in their pursuit of better products. The financial sector is increasingly recognizing that their capital can be spent more wisely and with less risk, if social and environmental attributes are included in their financial risk assessment for financing projects. Take for example Bank of America who recently committed $20 billion to support the growth of environmentally sustainable business activities and to address global climate change. Bank of America has committed $18 billion of this investment toward the finance of environmentally friendly commercial real-estate developments. The company will focus on real-estate projects that address “LEED certification, improvements in building energy efficiency, Brownfield redevelopment, promotion of smart growth, and the use of energy-related tax credits.” With this kind of financial backing and leadership from Bank of America, the greening of our homes and communities stands to benefit enormously.

How World Inc. is Creating a Greener Real Estate Industry
In World Inc. fashion firms from large multinationals to small agile regional residential developers and property managers are discovering that the rubber meets the road for them on the real-estate playing field, particularly as it aligns with technology insertion – green building products – and community-based economic revitalization strategies. In World Inc. we capture how firms create real-estate value in this new era of social response capitalism. In the next 5-years we see the greening of your homes and communities building like a tidal wave. This wave’s energy is being fed by the metrics and standards of the U.S. Green Building Council, the regulators and policy makers in the U.S. EPA and DOE, the green building products firms like Norbord and LP, the international remediation experts at BP and GM, and all those interested in revitalization of the economy through social response like foundations, developers, financial institutions and the public. We look forward to reporting to you on how this wave grows in more intensity and how government, corporations and society will benefit from riding this wave into a better, sunnier, and safer beachfront.

Dr. Bruce Piasecki is the author of World Inc.: When It Comes to Solutions — Both Local and Global — Businesses Are Now More Powerful Than Government available at www.worldincbook.com. Dr. Piasecki is also the founder of the AHC Group, Inc. a management consulting firm focusing on social response and corporate environmental strategy. Learn more on how to create value in social response at www.ahcgroup.com. Dr. Piasecki can be reached at Bruce@ahcgroup.com.

Mark Coleman is a Senior Associate with the AHC Group, Inc. and a major researcher on World Inc. As a researcher and practitioner of social response strategies Mark is helping corporate, foundation and government leaders discover the value in social response capitalism while aligning resources and creating actionable strategies for creating a better world. Mark can be reached at Mark@ahcgroup.com.