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From Site Selection magazine, July 2019

Top Locations for Sustainable Development

Green is as green does in these leading territories.

Apple’s new headquarters in Cupertino is powered by 100% renewable energy, in part from a 17-megawatt onsite rooftop solar installation.
Photo by Apple


Germany, Canada and the United States are the top three nations in order. Colorado, California and Massachusetts top all U.S. states. And Grand Rapids, Cincinnati and Lansing lead all U.S. metros. Those are the findings of Site Selection’s 2019 Sustainability Rankings.

Wait a minute. Three metros in the former Rust Belt are among the most sustainable in the nation?

Yes, that’s what the data says. In fact, the next cities in the rankings are Toledo, Indianapolis and Pittsburgh, followed by Minneapolis-St. Paul, Kansas City and Denver.

Site Selection’s rankings comprise indices (see tables) that blend standard green metrics such as LEED-certified buildings, renewable energy use and green building incentives with unique inputs such as areas’ corporate social responsibility profiles (based on data from CSRHub), brownfield redevelopment, corporate facility investments in sectors with green connections, commercial real estate environmental, social, and governance (ESG) data from Measurabl, and happiness and well-being scores. Indeed, Finland’s No. 1 ranking in the World Happiness Report 2018 helped it rise to No. 4 in this year’s tally — one of four Nordic nations to make our Top 10.

Using 12 indicators of employee, environment, community, and governance performance, CSRHub provides access to corporate social responsibility and sustainability ratings and information on 18,000 companies from 135 industries in 139 countries, using more than 600 information sources. “Managers, researchers, investors and app developers use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices, understand the consensus view on a company’s ESG performance, and seek ways to change the world,” says the company.

How much does CSR matter? Intel, in its most recent report, observed that while it once was a topic reserved for specialists, today 85% of S&P 500 companies regularly publish CSR reports. Among its own steps on the energy front, Intel since 2012 has invested more than $200 million in energy conservation projects in its global operations, resulting in more than 4 billion kilowatt-hours conserved and approximately $500 million saved through the end of 2018.

Governments are taking steps too. The City of Los Angeles Sustainability Plan includes ambitious standards for new buildings to be zero-emission by 2030 and all existing buildings to reach that goal by 2050.

Site Selection first partnered with CSRHub for this part of the rankings index two years ago, combining our Conway Analytics data on corporate projects with CSRHub data on the corporations themselves to come up with scores for countries and for U.S. states based on the CSR performance of both companies siting projects in those territories and companies headquartered in those territories.

How valuable is the Measurabl data? Valuable enough to attract Series B funding in January 2019 from S&P Global, which developed its first ESG product over 20 years ago with the launch of the S&P Dow Jones Sustainability World Index. According to Measurabl, over 30,000 commercial buildings representing nearly 7 billion square feet across 70 countries measure, manage, and report ESG performance using its service.

“We view ESG as critical to long-term value creation for companies, investors, and other stakeholders in the market,” said Martina Cheung, President of S&P Global Market Intelligence.

Taking Action

Companies with sustainability as a top priority include those in No. 1 Germany, such as Lufthansa Group, which just published its 25th sustainability report.

“Being an aviation group, we are aware of the fact that the past years’ growth in passenger numbers also implies growing responsibility for us to ensure that future mobility will be shaped in environmentally compatible ways,” wrote Carsten Spohr, chairman of the Executive Board and CEO of Deutsche Lufthansa AG.

The airlines of the Lufthansa Group have increased their fuel efficiency by 30% since 1994. They also set a new efficiency record in 2018: On average, the passenger airlines only used 3.65 liters of kerosene to fly a passenger 100 kilometers. Moreover, all official air travel for Lufthansa Group staff is now CO2-neutral, retroactively to 1 January 2019. And the Group will now convert its ground ops services in its home markets Germany, Austria and Switzerland to a CO2-neutral operation by 2030.

“This includes converting the vehicles to an electric or other emission-free drive and purchasing 100% green electricity at the earliest possible moment,” said the company. “Also, for all buildings of the Lufthansa Group, only green electricity will be used wherever possible.”

Porsche gets the message and lives it too. The company in Leipzig scored top marks and received the Platinum award from the German Sustainable Building Council (DGNB). DGNB has certified the plant — which is currently undergoing expansion within the context of electromobility — as a particularly sustainable industrial site. The sports car manufacturer also received a Platinum award in 2017 for its main plant in Zuffenhausen.

Among the highlights in Leipzig: Production is fully powered by regenerative energy sources, such as PV solar systems supplying power to body shops. A biomass plant in the direct vicinity of the factory meets the heat requirement of the paint shop as part of a process that is 80 percent CO2-neutral. Since 2015, energy efficiency measures have saved a total of 23.3 gigawatt-hours of power. In line with the “Green Logistics” theme, Porsche operates its railway transportation with ecologically produced power, increasingly using electric logistics vehicles, and has set up energy-efficient shuttle technology at the new, automated small parts warehouse.

But it’s not stopping there.

“Our vision is the ‘Zero Impact Factory,’ i.e. production facilities that do not leave an ecological footprint,” said Albrecht Reimold, Member of the Executive Board for Production and Logistics, adds. Since 2014 Porsche has already cut vehicle-specific CO2 emissions caused by production by more than 75%. The company says it reduced the energy consumption per produced vehicle in its plants by more than 30% and slashed water consumption by almost 20%. During the same period, the use of solvents has been cut by a third. “We stand by the climate protection targets agreed in Paris in December 2015 and have a clear responsibility to cut environmentally harmful emissions. Our aim in terms of sustainability significantly exceeds mere decarbonization,” Reimold said.

Renewables on the Way

According to the International Renewable Energy Agency (IRENA), lower prices for renewables will help. The organization’s latest report, released in May in the lead-up to Abu Dhabi’s global preparatory meeting for the United Nations Climate Action Summit in September, finds that renewable power already is the least expensive source of energy in many parts of the world. IRENA found that the global weighted-average cost of electricity from concentrating solar power (CSP) declined by 26%, bioenergy by 14%, solar photovoltaics (PV) and onshore wind by 13%, hydropower by 12% and geothermal and offshore wind by 1%. According to IRENA’s global database, over three-quarters of the onshore wind and four-fifths of the solar PV capacity that is due to be commissioned next year will produce power at lower prices than the cheapest new coal, oil or natural gas options. “Crucially,” said IRENA, “they are set to do so without financial assistance.”

Onshore wind and solar PV costs between three and four US cents per kilowatt hour are already possible in areas with good resources and enabling regulatory and institutional frameworks, IRENA said. “For example, record-low auction prices for solar PV in Chile, Mexico, Peru, Saudi Arabia, and the United Arab Emirates have seen a levelized cost of electricity as low as US$0.03 per kilowatt hour.”

In the U.S., policy and projects are proceeding apace. In Maryland, the administration of Gov. Larry Hogan has allowed the Clean Energy Jobs Act to take effect while also pursuing the goal of achieving 100% clean electricity by 2040. That’s music to the ears of champions of US Wind’s planned offshore wind farm.

The company in May signed an agreement with EPIC Applied Technologies for the installation of its meteorological tower beginning this summer, marking a key milestone in the advancement of its Maryland offshore wind project which is expected to be operational within 2023. US Wind will install up to 32 wind turbines at a distance of approximately 17 miles off the coast of Ocean City that will eventually produce 268 megawatts of offshore wind energy, an amount sufficient to provide 76,000 Maryland homes with clean, renewable energy. “It is anticipated that the US Wind project will result in the creation of approximately 7,000 direct and indirect jobs and represent an in-state investment of nearly $1.5 billion,” said the company.

Building Consensus

But what about regular old green buildings? One report says more people need to be aware of their benefits. Another offers guideposts on how to embed sustainability from the outset. And a third says better buildings are making progress.

In April, as part of its Living Standard initiative, the U.S. Green Building Council (USGBC) released a report that found through surveys that, when considering the connection between green buildings and personal health, almost a third of respondents (32%) indicated they have direct, personal experience with bad health associated with poor environments or living situations. In addition, when ranking how healthy their local environment is on a scale of 1-10, 65% gave it less than an eight. Yet when asked which terms most strongly relate to the environment and being green, only 11% identified green buildings.

“We know that green buildings are only part of the solution to lengthening and bettering the lives of every person on the planet,” said Mahesh Ramanujam, president and CEO, USGBC. “But we need to do more. That’s why the heart of the green building community’s efforts must go beyond construction or efficiency. Instead, our focus must be on what matters most within our buildings: people. This research questions our conventional wisdom and experience and helps inform our strategy for the future.”

Urban Land Institute’s “Embedding Sustainability in Real Estate Transactions” report, issued in June, states, “Understanding the potential value of a high-performing, sustainable building allows buyers and sellers to better assess and price the deal going in, to underwrite sustainability investments to drive higher returns, to market the value created by these investments to tenants, and to communicate this value to buyers when buying or selling an asset. The potential value at stake for embedding sustainability is significant, and in some cases can represent a 50%-plus increase in asset value over the lifetime of an investment.”

11 action steps:

  1. Acquisition due diligence
    • Look at actual energy expenses, not estimates.
    • Expand the due diligence/property condition assessment to include key sustainability factors.
  2. Financing the Deal
    • Include big-ticket items in project financing.
    • Leverage sustainability-specific financing tools.
  3. Hold Period
    • Upgrade the building systems in the right order, and as soon as possible.
    • Attract tenants at a premium by featuring sustainability and health in leasing activities.
    • Leverage leases to align costs and benefits for landlord and tenant.
    • Guide the tenant fit-out process to maximize building performance.
  4. Preparing for Disposition
    • Market your building to buyers who will pay a premium for sustainability.
    • Find a qualified appraiser, and use valuation guidance for sustainable buildings.
    • Make any remaining big investments a year before disposition in order to capture value in the sales price.

The U.S. Department of Energy (DOE) recently announced the progress made by the more than 900 public- and private-sector organizations involved in the Office of Energy Efficiency and Renewable Energy’s Better Buildings Initiative. Partners in the Better Buildings Initiative represent 32 of the country’s Fortune 100 companies, 12% of the U.S. manufacturing energy footprint, and 13% of total commercial building space, as well as 17 Federal agencies, eight National Laboratories, 28 states and 90 local governments. Highlights of their achievements include:

More than 360 Better Buildings Challenge partners have saved nearly $4 billion since the program began. Financial allies have extended more than $19 billion for efficiency projects. Partners have also saved more than six billion gallons of water.

More than 215 manufacturing partners located in all 50 states are working with DOE through the Better Plants program and report an estimated $5.3 billion in cost savings over the last seven years.

More than 220 Accelerator partners are creating new tools and strategies targeting specific efficiency barriers like access to packaged combined heat and power, sustainable wastewater infrastructure, and building energy data analysis.

Adam Bruns
Editor in Chief of Site Selection magazine

Adam Bruns

Adam Bruns is editor in chief and head of publications for Site Selection, and before that has served as managing editor beginning in February 2002. In the course of reporting hundreds of stories for Site Selection, Adam has visited companies and communities around the globe. A St. Louis native who grew up in the Kansas City suburbs, Adam is a 1986 alumnus of Knox College, and resided in Chicago; Midcoast Maine; Savannah, Georgia; and Lexington, Kentucky, before settling in the Greater Atlanta community of Peachtree Corners, where he lives with his wife and daughter.


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