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9 ways sustainability drives profit

<p>From lower costs to higher brand performance and improved employee morale, a serious business case can be made for sustainability. In case we forgot.</p>

Today most executives recognize that sustainability must be integrated into their organization's core strategy — not to say that they necessarily understand why. In fact, too many are still content wearing some kind of sustainability PR badge just because the "About Us" section of their website gives sustainability a one-paragraph mention.

For their sake and ours, here are nine reasons why all of us might want to redefine how we approach sustainability.

1. Lower costs

Sustainability drives profitability. For example, Intercontinental Hotels says it is saving $30,000 a month at two San Francisco hotels by micro-managing peak power. Watch for companies using the uninterrupted power supplies in their data centers to do the same thing. They might even rent spare capacity on their UPS to utilities — UPS as a profit center, anyone?

2. Increased revenue

CBRE, the world's largest commercial real estate services firm, surveyed San Diego and found that green buildings commanded 18 percent higher rents ($2.42 per square foot versus $2.02 per square foot) and higher occupancy rates (88.3 percent vs. 84.3 percent) than conventional buildings. Other surveys show similar results.

3. Higher capital value and ROI

In real estate, higher rents and lower turnover translate directly into higher capital values (PDF) that can average 10.9 percent for new buildings and 6.9 percent for older ones. It also helps you control your utility bill.

4. Leveraging broadband investments

As part of a smart-grid upgrade to make its electrical system more efficient, municipal utility EPB installed a 1-gigabit fiber optic network that reaches more than 172,000 homes and businesses in Chattanooga, Tenn. By building one network for both grid and Internet traffic, EPB was able to leverage its investments and construction costs, and provide local residents along with businesses such as Volkswagen and Amazon with some of the fastest Internet service in the country. This project will become a model for many communities.

5. Brand

Sustainable brands outperform their peers by 120 percent. Seventy-five percent of retailers say sustainability has strengthened or mitigated their brand. I have seen several private studies by the top branding agencies in the world that say similar things.

6. Customer engagement

Ask anyone who has retrofitted their restaurant or store with LED lighting: patrons linger longer. Anecdotal evidence is also being gathered about higher sell-through rates (let alone more savings, of course, as solid-state lighting and lighting networking can cut light power consumption by 70 to 90 percent.)

7. Recruiting

Workers younger than 25 rank an employer’s reputation as an important draw for a job. "It is one of the soft things that many companies don't understand but it is crucial in the retention and morale of employees," Larry Vertal of AMD has noted. "It is amazing how the highest talented people will grill you about your sustainability practices in job interviews.”

8. Health and wellness

Workplace and building design can have a direct impact on motivation, employee satisfaction and productivity. If you’re not freezing or complaining about the heat, you’ll get more done. This benefit may be tough to quantify, but the compelling anecdotes are growing. Hewlett-Packard found that lighting controls can reduce migraines. Data also shows that respiratory problems drop in retrofitted buildings.

9. Data center performance

With the trend towards cloud everything, data center managers are some of the biggest believers in sustainability as electricity can consume up to 30 percent of the operating budget. Google claims it has saved over $1 billion through its energy efficiency measures in its data centers.

What kinds of measures can be taken in a data center environment? Designing for energy efficiency can free up floor space, reducing real estate costs. Lowering wasted heat extends equipment lifetime and reduces failures. Even innovations such as flash memory storage systems — one of the more interesting new ways to reduce power consumption — let companies get more work done with fewer machines.

The list could go on. What are some results and unexpected benefits you’ve seen? And how do you think we can use hard data to move the ball forward?

Top image by  via Shutterstock.

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