Why Renewable Energy Is the New Must-Have Building Amenity
To be competitive in today’s business environment, real estate companies need to prove their commitment to sustainability or face customer, investor and media backlash. Using 100 percent renewable energy to meet electricity needs is one of the most powerful steps a company can take to advance corporate sustainability.
Many businesses are already looking to lease space in highly efficient buildings powered by clean energy. For example, real estate investment company Bentall Kennedy found that LEED-certified projects receive 3.7 percent more in rent and have 4 percent higher occupancy rates than non-LEED buildings, and ENERGY STAR buildings had 9.5 percent higher occupancy and earned 2.7 percent more in rent.
Avison Young has seen this trend as well, predicting that sustainability will become “a necessity for businesses looking to push into the next phase of a ‘new normal.’”
It’s not just tenants willing to pay more to support corporate ESG goals. In a study spanning 17 countries, 85 percent of consumers indicated that they’ve changed their buying habits to support sustainable purchases. Similarly, a Nielsen study on consumer purchasing decisions found that 55 percent of respondents would pay more for products that come from companies “committed to ‘positive social and environmental impact.’”
Companies that rent office space in buildings using 100 percent renewable energy can share this achievement to build brand loyalty and attract more customers. Early leaders like Google, Microsoft and JPMorgan Chase are reaching for an even higher bar, taking steps towards powering facilities with 24/7 carbon-free energy.
As the world’s largest companies continue to set ambitious renewable energy targets, consumers will begin to expect this from more of their favorite brands.
Earlier this year, the U.S. Securities and Exchange Commission (SEC) proposed new rules to ensure that ESG funds accurately describe their investments, which may require some money managers to share how much CO2 the companies they invest in are emitting.
The SEC also recently proposed a rule requiring all publicly traded companies in the U.S. to disclose their climate-related impacts, including greenhouse gas emissions. This would potentially offer much greater transparency to companies’ carbon risk. Businesses that want to attract investors should make their decarbonization strategies, such as reducing emissions from their buildings, public and transparent to attract new revenue.
Even while the U.S. economy is in flux, hiring is at an all-time high. Showcasing corporate sustainability achievements is a key component for attracting millennial and Gen Z hires. Fast Company, for example, found that around 40 percent of millennials chose their current job because of company sustainability policies, with some willing to accept a $10,000 paycut to work for companies with a strong environmental agenda.
Gen Z feels the same, with multiple surveys finding students from that generation very concerned about climate change, and 77 percent of respondents wanting to work in jobs that align with these values.
According to Cleantechnica, a sustainable building can serve as a litmus test to see if corporations are really “walking the walk” of their corporate values. A nice example of this is One Manhattan West, a newly opened state-of-the-art skyscraper that not only runs on 100 percent renewable energy 24/7, but allows building tenants to see this impact directly via Cleartrace’s energy and carbon accounting dashboards. Each hour of each day, companies renting space in One Manhattan West can demonstrate they are using 100 percent renewable energy sourced from Brookfield Renewable’s hydropower facilities in upstate New York. This transparency allows tenants and their employees to feel proud of where they work.
New York City’s Local Law 97, Boston’s Building Emissions Reduction and Disclosure (BERDO 2.0), and Maryland’s Climate Solutions Now Act of 2022 are part of a new wave of city and state laws mandating buildings to reduce and report on their greenhouse gas emissions. Further, with the passage of the Inflation Reduction Act, new incremental funding, support and incentives are coming to drive building decarbonization as well.
As companies continue to focus on ways they can reduce their carbon footprint, eyes are on the building sector to decarbonize. Building owners should source renewable energy to attract companies to rent their office space, and to answer the desires of consumers, investors, employees and policymakers.
It’s a win-win-win-win-win for all sides, but especially for the planet.
Lincoln Payton is the CEO of Cleartrace, an energy and carbon accounting SaaS provider focused on building sustainability.