Tuesday, January 24, 2012
Last week the Urban Land Institute (ULI) announced that the Greenprint Foundation has become a part of ULI's larger environmental initiative. Greenprint assembles voluntarily disclosed information from owners on the greenhouse gas emissions (GHG) performance of buildings. As I have written about previously, buildings consitute a considerable portion of worldwide GHG emissions, and reducing GHG emissions from buildings is the proverbial low-hanging fruit in global efforts to reduce such emissions.
So-called "Class A" building owners, especially in urban markets, have been among the quickest adopters of green building. There are at least two reasons. First, they often are chasing a market segment for whom being "green" is part of an image for which the tenant will pay. Second, the scale of large office and industrial buildings is such that it makes financial sense to invest in green building. Owners of "Class B" and "Class C" buildings have not rushed to the fore because they typically are seeking value-oriented tenants, which they do not believe will pay for green improvements.
One issue with long-term green building investments for commercial spaces, then, has been how to "monetize" such improvements. Part of the difficulty in doing so is that there has not been great comparative data on how a building should perform. As a result, it has been difficult to bring the "greening" of a large commercial space into a transaction. California has sought to do just this through mandatory energy disclosures. But with no federal climate change legislation on the horizon, property owners in other states may have trouble convincing buyers to pay them for green improvements. That is where voluntary disclosures, and programs like Greenprint, make a lot of sense to me. With data provided by the industry voluntarily on a wide number of buildings, the industry has a better gauge for how buildings perform under given conditions, and the relative merit of green improvements can begin to be monetized as a part of market transactions, not simply just as meeting regulatory requirements.
I'm excited to see where this goes. Here is an excerpt from the ULI press release, which can be viewed in its entirety here:
The ULI Greenprint Center will be incorporated into ULI’s broader Climate, Land Use and Energy (CLUE) initiative. The center will carry on the Greenprint Foundation’s mission, which is to lead the global real estate community in the use of greenhouse gas reduction strategies that support the Intergovernmental Panel on Climate Change (IPCC) goals for global greenhouse gas stabilization by 2030. The ULI Greenprint Center will continue to advance the Greenprint Foundation’s goal of a 50-percent reduction in building emissions by that date. Currently, the energy used in buildings represents one-third of all global energy consumption.
ULI, with nearly 30,000 members worldwide, is a 75-year-old research and education institute dedicated to leadership in the responsible use of land and building sustainable, thriving communities. The Greenprint Foundation, currently based in New York City, was founded in 2009 by longtime ULI member Ronald P. Weidner as a worldwide alliance of real estate owners, investors, financial institutions and other industry stakeholders committed to reducing greenhouse gas emissions across the global property industry. To date, the Greenprint Foundation’s member organizations are: Aetos Capital; AvalonBay; Beacon Capital Partners; Blackstone Group; DEXUS Property Group; Douglas Emmett; Equity Office Properties; GE Capital Real Estate; GLL Real Estate Partners; Hines; Jones Lang LaSalle; LaSalle Investment Management; Paramount Group; PATRIZIA Immobilien; Prologis; Prudential Real Estate Investors; RREEF, a member of the Deutsche Bank Group; Sonae Sierra; and TIAA-CREF.
“With the support and resources of ULI, the ULI Greenprint Center will lead the global property markets in reducing greenhouse gas emissions in a meaningful and measurable way. More importantly, it can help change the behavior of the population at large,” said Weidner, the founder of the Greenprint Foundation.
The flagship product of the Greenprint Foundation is its Greenprint Performance Report™, which includes the Greenprint Carbon Index™ (GCX), a tool used by Greenprint Foundation members to gauge relative progress in reducing greenhouse gas emissions over time. The first volume of the report, issued in 2010, contained results obtained from performance during 2009 as a baseline measurement. The second volume, issued in 2011, had results for 2010 that included 1,623 properties in the Americas, Europe and Asia, and which covered a total of 31 million square meters of commercial space. It showed a 0.6 percent reduction in greenhouse gas emissions from the previous year on the like-for-like portfolio of submitted properties.
The international scope and size of the report, including the GCX, make it one of the real estate industry’s largest, most verifiable, transparent and comprehensive energy benchmarking tools. It is unique in that it provides an open standard for measuring, benchmarking and tracking energy usage and resulting emissions on a building or portfolio basis.
Kudos and thanks to my former colleague, Jared Eigerman, who had a role in shaping Greenprint, and who tipped me off to this development.