Business Drivers for Green Buildings

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Business Drivers for Green Buildings Infra
Dr. Seppo Junnila Helsinki University of
Technology P.O.Box 9800, FI-02015 TKK,
Finland email seppo.junnila_at_tkk.fi
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Content

• Background
• Environmental sciences
• Economic theories
• Business indicators
• What green buildings infra has to offer
• How to Boost Emergent Demand?
• Information and marketing
• New production philosophy
• User involvement
• Business concepts and value chains

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Science about Green BuildingsInfra

• Services sector creates 70 of the value added in
  the world and is the fastest growing sector
  (World Bank 2006)
• Services is responsible for 40 of total
  industrial GHG emissions in the United States
  (Suh, EST, 2006)
• The office building (with infra) contributes
  roughly 30-55 to environmental impacts in
  services companies (Junnila, Int J LCA, 2006)
• Buildings account for 40 of worlds materials
  and energy flows (U.S. DOE 2002, UNEP 1999,
  Worldwatch 1995 )

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Economics about Green BuildingsInfra

• Building efficiency is economically the best
  short-term strategy for California to reduce
  climate change (Hanemann et al. 2005)

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Carbon market in EU

• In Europe, the size of carbon market is 20 000
  50 000 million (EU Emissions Trading Scheme)
• Suggestions both in UK that the building owners
  should be included (The Guardian, 6-Dec-06)
• Many of the UK's big businesses - including
  supermarkets, banks, universities, hotel chains,
  hospitals and government departments - would be
  forced to sign up to a carbon-trading scheme
  under proposals being drafted by ministers Gordon
  Brown
• cover all organisations with annual electricity
  bills of more than 250,000, or with electricity
  consumption above 3,000 megawatts - The Guardian,
  6-Dec-06 -

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Business about Going Green

• Wall Street Journal, 23-Jan-07
• In the US, a growing number of companies are
  pushing for a mandatory emissions limit, or "cap."

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Market Value of Green Companies
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Operational Performance of Green Companies

• Guenster et al. 2005
• The least eco-efficient firms show significant
  operational underperformance
• Eco-efficiency improves Return on Assets, more
  than 10 percent of the average ROA
• The survey results, as well as other available
  literature, corroborate the view that ISO 14001
  accreditation confers economic benefits

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Green BUILDINGS INFRA can offer

• Buildings Infra is a platform for businesses
• The best environmental improvement potential
• Good cost benefit ration
• Existing solutions
• Short reaction time

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Whats stopping the companies?

• Business concepts and models
• The value chains and customers, fallacy of volume
  
• The Long Tail economy - NO blockbusters
• Products vs. Services if you talk the talk be
  prepared to walk the walk
• User involvement - Remontti Reiska vs Jaana
  Pelkonen
• Leap into unknown for many organizations
• Operational philosophy in construction industries
• Adversial relations
• Sub-optimizing, sub-contracting
• Defensive approach
• Understanding and communication
• Biased toward smokestacks
• The common mind set
• Transformation of economies from manufacturing to
  services is a solution to the environmental
  problem

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Cost structure of the customer
- Junnila, Facilities 2004
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Change in Operational Philosophy

• Some required attributes
• Management based on long-term thinking
• Bring problems to the surface
• Add value to the end customer
• Level out the workload
• Get the quality right at the first time
• Standardize tasks for continues improvements and
  employee empowerment
• Respect your extended network of partners by
  challenging and helping to improve

Mangement principles of the worlds greatest
manufacture Toyota!
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Understanding and communication
- NousiainenJunnila, CIB Helsinki 2005
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Conclusion

• There seems to be a good business opportunity for
  Green Buildings and Infra
• Scientific evidence
• Economic theories
• Business success
• However, the competitive edge is narrowing...
• Technology innovations are needed but also
• Business concepts and models
• Operational philosophy
• Understanding and communication
• Sustainable Communities is all about
• Maximum value by Minimum waste