April 13, 2011
In recent years, “green” has become a predominant theme in the corporate and social lexicon, and a critical business driver in many companies’ overall strategy.
In an emerging trend, senior level executives publically proclaim the “green” high ground as a corporate philosophy while middle management supports the organizational objective with “green” real estate strategies, many of which tend to be focused on energy efficiency because it has the greatest potential for savings.
More recently, water scarcity and associated rising costs have become critical issues bordering on a crisis, as a survey of recent headlines attests: “metro eyes evening lawn sprinkling ban to conserve water,” “water shortage warning issued for 16 Florida counties,” “Pasadena will face water shortage emergency this month,” and “spring watering restrictions now in effect.”
The Sustainability Roundtable, Inc. (SR Inc.) recently released a client briefing with the following key takeaways:
Water scarcity has increased average water rates of 310% over the past 25 years compared to a 207% increase in the CPI. In many areas, water consumption charges do not yet reflect the true cost of water, but they are rising quickly because subsidies that kept them artificially low are being phased out. For instance, NYC has raised water rates 12.9% for three years in a row, and plans to do so again in 2011. Water districts are raising prices to cover the full cost of water treatment, storage, and delivery. As water scarcity intensifies and water rates increase so does the pressure for governments to mandate efficiency.
Companies that utilize LEED standards on new construction and existing building retrofits can reduce water consumption by 20-50%. The LEED certification guidelines include a pre-requisite for water reduction (20%), water efficient landscaping, innovative wastewater technologies, water performance measurement and cooling tower management.
Water scarcity and increasing costs are getting attention from investors who are interested to learn how companies manage their water use. In 2011, for the second year running, the Climate Disclosure Project is requesting information on the risks and opportunities companies face in relation to water on behalf of 354 institutional investors with assets of $43 trillion. Water is sometimes called “the new carbon,” but while CO2 emissions are only priced in some markets, water costs and risks are increasing in all markets.
Most companies already focus on energy efficiency, but water and energy are interconnected. Efficient use of water reduces on-site energy use, as well as the energy required to supply fresh water and treat wastewater and recycle water. Power plants which produce electrical power use water for cooling or to turn turbines. By extension, water use causes carbon emissions because of the energy required to source and pump it. The Environmental Protection Agency reports that about 8% of US energy demand goes to processing and moving water.
Storm water is typically a problem which requires expensive infrastructure both on-site and off-site to solve. Leading corporate real estate executives are seeking ways to re-assess the management of storm water to capture its value and reduce capital as well as operating costs.
As water is beginning to play an increasingly important part of an overall sustainability strategy, measuring and auditing water use is essential to create a baseline and to benchmark. Common corporate water efficiency goals are incremental 2-3% annual improvements as a reduction in the volume of water used by area (gallons per square foot), but some organizations are targeting 20-30% 1-year goals.
An integrated approach to implement water efficiency includes:
Michael Gresty, SR Inc.’s Executive Vice President of Research and Consulting, comments that “many corporate real estate executives remember the poor quality of the first generation of more efficient low flow fixtures, and associate water efficiency with thoem and associated municipal mandates that had low or no payback. Today, there are numerous solutions on the market that have been thoroughly tested and work extremely well. Moreover, while bathroom fixture replacement is important, our research shows that the biggest gains can often be in leak detection and repair, cooling tower efficiency, and non-potable irrigation or xeriscaping, all of which can both be easier and less costly to implement.”
The operational market drivers of rising costs and increasing scarcity, in concert with strategic drivers of reputational risk, green building certification, and investor interests are compelling leading corporate real estate executives to create value through water efficiency. To achieve this, industry best practices are to:
Clearly, “blue has become the new green” due to the importance of water conservation to address operating cost reduction and as an integral part of a successful “green” sustainability strategy.
