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The Business Case for Sustainability. June 11, 2008 Ameristar Hotel St. Louis, MO. The Business Case for Sustainability – Speakers. Moderator: Doug Gatlin, Vice President of Market Development, U.S. Green Building Council Panelists:
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The Business Case for Sustainability • June 11, 2008 Ameristar Hotel St. Louis, MO
The Business Case for Sustainability – Speakers Moderator: • Doug Gatlin, Vice President of Market Development, U.S. Green Building Council Panelists: • Greg Kozicz, PhD, CEO & President, Alberici Corporation • William Hepburn, Director of Image Management, General Motors • Gary Laundroche, Director of New Business Development, Bloom General Contracting, Inc. • Tim Carey, Director of Sustainability & Resource Management, PepsiCo-Chicago
Enhancing Project Value with LEED Certification Doug Gatlin VP, Market Development USGBC June 11, 2008
44% Increased Valuation Believe sustainability initiatives help attract employees 43% Owner Demand: Operating Expenses Expect growth opportunities from sustainability 67% See green building as a market differentiator Will green at least 16% of their real estate by 2009 82% McGraw Hill Greening of Corporate America Smart Market Report 2007
Scores are tallied among five credit categories: 1. Site Planning 2. Water Efficiency 3. Energy Performance 4. Material & Resource Use 5. Indoor Environmental Quality Five additional credits can be earned through Innovation in Operation and Upgrades LEADERSHIP in ENERGY and ENVIRONMENTAL DESIGN A leading-edge system for certifying the greenest performing buildings in the world WHAT IS THE LEED SYSTEM?
Alberici Corporation • Headquarters • Greg Kozicz, Ph.D • CEO & President, Alberici Corporation
Vincent Metals St. Louis, MO
Sustainable Design and Construction Environment Green buildings use less resources and reduce the impact on the natural environment. People Workers enjoy a healthier indoor environment. Green Building Bottom Line The reduction in operating costs positively impacts the bottom line for businesses.
The Business Case – Cost and Cost Savings • Cost Inflators • Cost Savings • Construction • Renovation • Operation and Maintenance • Building Valuation
Traditional Design and Construction • Energy-inefficient mechanical systems. • Sealed buildings with no connection to natural light. • Building products with no regard to embodied energy. • Wasteful water fixtures
The Business Case Environmental Benefits • Operational Reductions • Waste • Water • Energy • Community Relations • Corporate Citizenship • Company Reputation
Ten Benefits of Sustainable Design 1. Recover Higher First Cost – If Any 2. Design for Cost Effectiveness 3. Boost Employee Productivity 4. Enhance Health and Well-Being 5. Reduce Liability 6. Create Value for Tenants 7. Increased Property Value 8. Incentive Programs are Available 9. Benefit Your Community 10. Achieve More Predictable Results
General Motors Dealer FacilitiesBill Hepburn & Gary Laundroche
Example:LaFontaine Buick – Pontiac - GMC – Cadillac • Located in Highland, Michigan • 63,000 SF facility • Pursuing a LEED “Gold” certification. • Would be one of the first Gold certified dealerships in USA • Dealers are independent businesses.
Short Term Goals • Assist our dealers: • Reduce energy use & cost • Develop a competitive advantage in the market place • Market & sell vehicles to environmentally conscious consumers • Expect an increase in sales • Improve image in the community • Part of solution – Not part of the problem • Stimulate local economies with regional materials • “Do the right thing”
Long Term Goals • Assist our dealers: • Reduce negative impact on the environment • Reduce long term lifecycle cost • Reduce the impact of spikes in energy cost • Help the local community • Be a good corporate citizen
Barriers to Success • Decision to go for LEED certification made too late in process • Project team including Architect, Contractors and Suppliers lacked LEED knowledge and experience at onset of project • Steep learning curve & sub education needed • Additional coordination efforts needed • General perception cost of construction would be considerably higher • Industry executives recently estimated 13-18%* incremental cost • Perception more difficult to build • General belief LEED is cost prohibitive * As reported by Market Barometer, Turner Construction
Business Case for Sustainability • Economic Benefits: • Reduced utility cost 2-30 %* • Improved employee productivity 2-16%* • Reduce total lifecycle cost over 20 years** • Sales & marketing benefits • Tax deductions & energy credits • Health & Community Benefits • Easier community permitting & less red tape in some cases • Environmental Benefits * As reported by US Green Building Council (USGBC) ** As reported “The Cost of Green Revisited” Davis Langdon, July 2007
Best Practices & Lessons Learned • Make decision to go for LEED certification early in process • Before site selection • Assemble a team of LEED accredited professionals with experience in designing & building “Green” buildings • LEED is about more than “Green” – it’s about sustainability for generations to come
Sustainability at PepsiCo Tim Carey
Global Food and Beverage Company Over $35 Billion in Revenue, more than $6 Billion in Profit 17 billion-dollar brands Major Operating Sectors PepsiCo Americas Foods (Frito Lay, Quaker Foods and Snacks) PepsiCo Americas Beverages (Pepsi Cola, Gatorade, Tropicana) PepsiCo International Profile of PepsiCo
Our Evolution Phase I – Environmental: • Reduce environmental impact by improving PepsiCo’s operational effectiveness and eco-efficiency • Strengthen corporate environmental governance mechanisms • Enhance external communications and transparency Phase II – Social: • Through engagement, address key social issues local and global. AIDS/HIV, child labor, safety Phase III – Integration: • Full integration of the three legs of sustainability into all decision making Phase 3 Phase 2 Phase 1 Integration Maturity Social Environmental 2010 1990s 2000
Energy and Water Environmental Platforms Resource Conservation 2010 Goals = 30% reduction over 2004 To date savings: PepsiCo-Chicago -- 1 billion gallons water -- 520,000 equivalent bbl’s of oil -- 386 million KWHs Technology Development - Faster product lines - On-Site Bottle Delivery - Waterless Rinsing • World Class Conservation • Largest LEED Bev Sites in World • Largest Energy Credits in World • Energy Star “Partner of Year” • (4) LEED Sites • - Facility Efficiency • - Process Innovation • - Sustainability Education
LEED Certification Blue Ridge Gatorade Plant, 2nd Largest Food /Beverage LEED Site in the World – LEED Gold – April 2007 Future PepsiCo Chicago Headquarters will be the first PepsiCo office to achieve LEED Certification – JUL’08 Future Tolleson, AZ Gatorade Plant LEED GOLD – AUG’07 Pryor, OK Gatorade Plant, Largest Food/Beverage LEED site in the World – April 2008 -- LEED GOLD Central Florida Gatorade DC LEED GOLD – ca 2009
Example Projects – Facilities Photovoltaics—Fullerton Warehouse • Capture Sun’s energy convert to electricity • Warehouse will be off-grid during peak hours (11AM to 3PM) • Start-up May 2008 • Target savings ~1,000 barrels of oil/year
Example Projects – Manufacturing Nearly 63mm Gallons of Juice Storage Tropicana Unit Train backhaul program Modified storage and transportation methods • Significant decrease in operating costs • Reduced electrical consumption • Reduced waste water discharge and treatment costs • Significantly reduced GHG emissions