{"id":577813,"date":"2010-05-25T11:46:27","date_gmt":"2010-05-25T15:46:27","guid":{"rendered":"http:\/\/dirt.asla.org\/?p=4605"},"modified":"2010-05-25T11:46:27","modified_gmt":"2010-05-25T15:46:27","slug":"calculating-sustainable-return-on-investment-sroi","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/577813","title":{"rendered":"Calculating Sustainable Return on Investment (SROI)"},"content":{"rendered":"

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\nThe U.S. Green Building Council’s 2010 Federal Summit focused on how green site and building practices can be used\u00a0to\u00a0implement President Obama’s new executive order (13514)<\/a>, which calls for all federal buildings\u00a0to be net-zero by 2030 and the federal government\u00a0to reduce its\u00a0greenhouse gas emissions (GHGs)\u00a0by 28 percent by 2020.\u00a0<\/p>\n

Martha Johnson, administrator of the General Services Administration (GSA),\u00a0said the U.S. government makes purchasing decisions\u00a0that impact\u00a0350 million square feet per year, meaning its a “fulcrum for sustainable performance.”\u00a0Johnson introduced the GSA’s zero\u00a0environmental footprint (ZEF) initiative<\/a>, which aims to eliminate the negative impact of the federal government on the environment. “This is our moonshot. It’s the right thing to do, but we need to take\u00a0risks, innovate, and get out of our comfort zone.” Johnson added that the government is also now taking a cradle-to-cradle (C2C) approach so we create “design use and reuse cycles.” She also said\u00a0the GSA has been incentivizing\u00a0investment in “seeding new technologies,” such as more efficient roof-based solar panels.<\/p>\n

USGBC CEO Rick Fedrizzi said the GSA’s zero\u00a0environmental footprint (ZEF) initiative is a critical\u00a0component to spreading\u00a0green\u00a0site and building best practices.\u00a0He that across the U.S. one million square feet of building space is already being certified LEED every day. While environmentalists argue that this is “still a tiny amount, it’s still\u00a0the largest demonstration project in U.S. history.”<\/p>\n

Panelists at one session focused on\u00a0calculating the\u00a0costs and benefits of\u00a0sustainable sites\u00a0and buildings with a new accounting model: sustainable return on investment (SROI). Stephane Larocque, Principal Economist, HDR Architecture<\/a>, said SROI is about determining the “triple bottom line.” To ensure all stakeholders buy-in to the SROI calculated by the model, HDR holds “public calculation sessions” to generate transparency.<\/p>\n

Larocque outlined the main components of HDR’s model: benefits and costs. Benefits include cash benefits (reduced costs) and non-cash benefits (health, productivity, water, resiliency, safety, reduced greenhouse gas emissions, and reduced air contanimants). Costs included capital, operating, maintenance and waste disposal. Once the model (which HDR developed as an excel spreadsheet) is integrated with a set of data on each factor, HDR creates a set of\u00a0financial results,\u00a0 financial + internal non-cash impacts, and financial + internal and external non-cash costs and impacts. HDR said “it’s all about monetizing inputs, adding social and environmental factors, and using good data sources.”<\/p>\n

To ensure they use good data sources,\u00a0HDR\u00a0does\u00a0”meta-research analyses,” covering all known environmental and scientific research on a given social or environmental factor. As an example, HDR will aggregate and select a median number\u00a0from all legitimate research\u00a0studies with numbers on the economic benefits of green buildings on worker health. To create a\u00a0price on CO2 emissions that can be used in the model, a range of data\u00a0types were considered. “We looked at financial insurance markets, Chicago carbon exchange, and\u00a0E.U. carbon markets, willingness-to-pay surveys, and expert opinions.”\u00a0HDR also looked at EPA state-by-state data on environmental pollutants per megawatt hour of energy. “We can create a probability curve around these values to generate an example cost of CO2 for our model.” Still, HDR enables a wide range of numbers to be plugged in. For instance, some people think climate change isn’t real, so they’d put the cost of one ton of carbon at zero. In comparison, the E.U. currently said the cost is around $75 per ton. The U.S.\u00a0Department of Transportation (DOT)\u00a0has listed $33 per ton in its TIGER challenge grants.\u00a0<\/p>\n

In the recent project, a government hospital was calculating the SROI of\u00a0LEED silver vs. doing nothin. HDR monetized the external non-cash benefits of LEED silver, which generated “more robust returns.” In another example, Johns Hopkins University determined that the financial return of its\u00a0campus sustainability initiative was 11 percent, but once society’s perspective was added in, the return was 43 percent. “In this case, external benefits had to be added in to get grant money and gain Board approval for the campus greening project. SROI was used to prove environmental stewardship.”<\/p>\n

Sustainable sites’ internal and external non-cash benefits were explored by applying the model to the army-run\u00a0Ft. Belvoir Community Hospital,\u00a0a landscape case study mentioned. Inside, the hospital focused on improving natural lighting and energy efficiency. Outside, the hospital\u00a0invested in increasing\u00a0access to nature through healing gardens, green roofs, and expanded green space. An overall integrated site design\u00a0was used to\u00a0improve patient recovery rates. One of the additional benefits: $40,000 in GHG emissions costs\u00a0were saved per year. In a U.S. Marine’s hospital in Korea, pervious pavements and healing gardens were also added to both achieve financial success and increase the return on investment to Korean society as a whole. “Sustainable site benefits include CO2 and criteria air contaminants avoided.”<\/p>\n

HDR\u00a0concluded that\u00a0many projects still use plain-old ROI, NPV or other methods,\u00a0to determine project financing, which means a lot of sustainable projects don’t get built.\u00a0Adding “environmental externalities” into any ROI model is crucial to\u00a0increased investment in sustainability.\u00a0<\/p>\n

The firm has gotten a wide range of support for the model, including a mention at the Clinton Climate Initiative, and Larocque said he will be developing a curriculum on the model with Harvard and Columbia universities. Unfortunately, HDR has yet to make the model (or data sets) available to all. Hopefully, checklists and assessment tools will be forthcoming.<\/p>\n

Learn more about HDR’s approach in this powerpoint presentation<\/a>.<\/p>\n

Image credit: K. Duteil \/ ASLA 2006 General Design Honor Award. The Elizabeth & Nona Evans Restorative Garden Cleveland Botanical Garden, Cleveland, Ohio. Dirtworks<\/em><\/p>\n

\"\"<\/a> \"\"<\/a> \"\"<\/a> \"\"<\/a> \"\"<\/a> \"\"<\/p>\n","protected":false},"excerpt":{"rendered":"

The U.S. Green Building Council’s 2010 Federal Summit focused on how green site and building practices can be used\u00a0to\u00a0implement President Obama’s new executive order (13514), which calls for all federal buildings\u00a0to be net-zero by 2030 and the federal government\u00a0to reduce its\u00a0greenhouse gas emissions (GHGs)\u00a0by 28 percent by 2020.\u00a0 Martha Johnson, administrator of the General Services […]<\/p>\n","protected":false},"author":7015,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-577813","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/577813","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/7015"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=577813"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/577813\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=577813"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=577813"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=577813"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}