Adoption of LEED standards is typically framed as a means of reducing operating costs; the greater expense in designing and building sustainable facilities is offset by reduced energy consumption in future years. This becomes a theoretically easy business case that should be readily accepted: an investment in current periods providing future savings in costs. The challenge, however, is two-fold: it requires foresight and a willingness to invest in the long term, and there needs to be confidence that the promised benefits are realistic and attainable.
The problem of foresight and willingness to invest is a significant one. The reality for most organizations and executive teams is that they are relentlessly short-sighted in their focus, focussing on impacts that will be this year or this quarter. A building project started today won’t open for another two years, and with a life expectancy of (hopefully) 50 years or more, many of the real benefits of an infrastructure project of this scale won’t be seen for some time. The temptation–and the tendency–is to focus on the immediate, resulting in cutting corners in the pursuit of minimum cost savings.
Confidence in the attainability of the benefits is often a more difficult issue to address. Business cases are, at best, estimates of what will happen in the future. Their outcomes are not guaranteed, and cannot be truly known with confidence until they have been realized. The result is that business cases rely heavily on the development of assumptions, and validation of a business case relies upon assessing whether or not the assumptions are reasonable and can be agreed with.
While this should be a straightforward exercise, however, it is far from it. For many, “assumption” has become a dirty word; assumptions are viewed as fantastical estimates with no foundation in reality, and those that develop them are seen to be lacking any discipline, knowledge or expertise—otherwise, the numbers would be better. This critique largely seems to stem from a belief that everything should be measured and measurable, and lack of accuracy is simply a product of laziness and lack of expertise.
The problem with this perspective is that there are, quite simply, many things that cannot be known and can only at best be forecast (and sometimes even those forecasts are incredibly loose). Let’s look again at the example of LEED-certified buildings, which should be a relatively straightforward business case to construct. The essential case is simple: create more sustainable buildings, and lower operating costs. While the underlying methodologies within the LEED standard should provide the data to support these calculations, the reality is that the evidence supporting these operations is less statistically reliable than many would like.
Studies of LEED energy savings suggest that operating cost savings of 25 to 35 percent should be possible over traditional construction practices. And while there are buildings that support these outcomes, there are others that do not–and in fact consume more energy than comparable buildings. A prominent study found no overall correlation between LEED certification and energy use overall. Explanations for these findings included arguments of LEED buildings being new, and therefore still working through operational problems; varying energy consumption based upon occupant activities and different results for differing types of buildings.
The point of all the above is not to say that sustainability in general, or LEED certification in particular, is a waste of time. It is to highlight that finding data to make this justification credible is extremely difficult, and even where data does exist it is open to interpretation, which means it is also open to challenge. At best, you can make assumptions, and ensure that those assumptions are defensible. At the same time, however, those seeking to undermine a business case generally have to look no further than the assumptions in order to find the necessary ammunition.
Extrapolate these issues to other sustainable initiatives, and the scope of the problem becomes readily obvious. Investing in something because it is “the right thing to do” becomes more of an article of faith than a well-supported argument. While sustainable practices require greater costs, more effort and additional constraints over normal approaches, these incremental increases need to be justified–or they need to be accepted. When even straightforward projects are hard to justify defensibly, acceptance and commitment is necessary.
This requires thinking differently about how we evaluate projects going forward. Within some organizations, particularly in the public and not-for-profit sectors, approaches like the use of a “triple bottom line” have been advocated. These are intended to expand the normal thinking about an initiative beyond that of strictly financial to include measures of environmental and social responsibility. The benefit of a triple-bottom-line approach is in making explicit the need to evaluate more than just the dollars and cents of a project. It consciously demands an assessment of how the initiative will impact the society and the environment.
Practically speaking, however, organizations that have consciously endeavored to implement a triple-bottom-line approach have encountered difficulties in doing so. A significant challenge is the disconnect between the lip service of using this approach and its impact on actual decision making. Sponsors and steering committees often still emphasize the financial aspects to the exclusion of virtually all else, and project managers struggle with what they are supposed to include when developing business cases and project plans that take a triple-bottom-line approach.
If we take the example of a LEED-certified building as we have done so far, this should be an easy business case to frame. We’ve already discussed the operating impacts in terms of financials. As well, there are studies that have highlighted not just improved environmental impacts (including improved re-use, less waste and lower impact construction practices) but also improved societal benefits, particularly for building occupants (including improved productivity as a result of better ventilation, temperature control, lighting and reductions of indoor pollution). While positive and supporting exactly the kinds of measures that a triple-bottom-line approach advocates for, the problems with these claims are exactly the same as those associated with the financials: they are difficult to generalize from, and many studies struggle with the degree to which the conclusions are statistically significant.
This leaves the idea of sustainable or “green” projects in a challenging predicament. Proceeding forward with them requires a commitment that goes beyond just what can be put into a business case. Or, alternatively, it means accepting that business cases are based upon assumptions because they have to be, and provided we support the basis of the assumptions we can support the conclusions to which they contribute. This isn’t a problem of sustainability, per se; it is a much larger problem that affects most business cases. But it is this particular problem that allows the most progressive of initiatives–which are the ones that we theoretically should be supporting–to be shot down. That behavior is simply not sustainable.