When people talk about the business case for the energy-efficient buildings achieved through comprehensive measures like deep energy retrofits, what usually comes to mind first is lower energy bills. However, an increasing number of organizations are recognizing the value beyond energy cost savings that energy-efficient buildings provide.
In December 2013, Rocky Mountain Institute (RMI) wrote about how deep energy retrofits can reduce the cost of healthcare. It turns out that energy-efficient buildings do more than just reduce energy bills for energy-hungry healthcare buildings; they also improve the quality of the healthcare services that these companies provide patients. For example, energy-efficiency measures addressing low ventilation rates and airflow in healthcare facilities reduce the risk of transmitting infectious diseases, as high ventilation rates and airflow have been shown to greatly reduce the transmission of airborne illnesses. Studies have found that patients in sunny hospital rooms versus rooms using artificial light have a decreased length of stay, a trend also observed for patients staying in hospital rooms with windows overlooking a scene of nature. Furthermore, the University Medical Center of Princeton found its airy, sunny, and calming hospital rooms led to a 30 percent reduction in pain medicine requests, record-low infection rates, and patient satisfaction in the 99th percentile.
But the direct and indirect health benefits of energy-efficiency improvements need not be confined to the healthcare industry. Many organizations in other sectors are beginning to account for and harvest energy-efficiency’s value beyond energy cost savings, including improved employee health. Improved health and other beyond-energy benefits are changing the game in the way real estate stakeholders across all sectors evaluate prospective investments in energy-efficient buildings.
Google, Energy Efficiency, and Employee Health
Google claims it always puts the user first. It should then come as no surprise that Google wants to provide a great user experience for employees. This is why it values healthy workplaces conducive to employee wellbeing. And it is also why Google invests in energy-efficient buildings. “Energy efficiency is a huge focus for Google—both in our productivity and our operations—and we’ve found that it aligns with our goals for healthy workplaces,” Anne Less, [e]Team Innovation Program Manager at Google, told RMI. “There is a strong correlation between workplace satisfaction and temperature, and similarly with Googlers’ self-reported productivity.”
Google evaluates decisions it makes for workplaces through the lens of the company’s values for health, user experience, and sustainability. These factors are considered throughout the real estate lifecycle—from concept, through design and construction, to building operations—and are increasingly weighed equally with factors such as cost, energy, and others depending upon the individual project at hand.
To achieve greater employee satisfaction and reduce health costs, Google makes efforts to create innovative designs with natural light and clean air, eliminate exposure to harmful chemicals, and to use natural resources more intelligently in its facilities. The company also experiments with different ways to provide energy-efficient and comfortable office environments for employees, testing measures both at the workplace level and more broadly with HVAC systems. Google’s successful efforts, such as achieving half the national average for traditional office energy use in its test building, help push the boundaries for energy efficiency and provide examples to others demonstrating why making investments that benefit employees bears fruit to the bottom line.
The Health Case for Energy-Efficient Buildings
RMI’s Deep Retrofit Value practice guide describes the substantial evidence suggesting that energy-efficient workplaces are healthier workplaces. Studies show that energy-efficient buildings can improve health by reducing psychological stress, the number of sick days, incidence and severity of asthma symptoms, respiratory illness, and even chronic pulmonary disease and cancer. Why? Measures that improve a building’s energy performance can help control moisture and pollutant sources, improve ventilation and access to outside air, provide indoor thermal comfort and daylighting, and offer more visible access to the natural environment. For example, one study found that modern office designs using daylighting and offering a view reduce stress levels significantly more than traditional office designs. Another study found an association between doubling the ventilation rates in offices and a 35 percent decrease in short-term absence.
Organizations have a practical yet meaningful stake in employee health, as labor costs often represent their largest cost. Therefore, a deep energy retrofit’s health benefits can have a dramatic impact on the bottom line, even if the measure only reduces the number of sick days by a percentage point or two. In fact, because organizations’ labor costs tend to be much larger than energy costs, the financial value of just a slight improvement to physical and psychological health resulting from energy-efficiency measures can (significantly) exceed the value of less-expensive energy bills.
A company that has healthier employees is one that puts more of its money to productive uses. Both the employer and the employee therefore win from measures like deep energy retrofits that create a healthier work environment. Investing in measures that improve employee health also enhances the health profile of companies, enabling more favorable contracts and directly reducing expenses with health insurance and medical providers. Energy-efficient buildings thereby offer a means for organizations to both show commitment to improving society and boost their bottom line. “Investing in Googlers’ health and happiness delivers business outcomes that we care about, including innovation, retention, and performance,” according to Anne Less. “And, we know that happier employees are more productive, and more fun to be around.”
Any company, big or small, has a stake in the opportunity presented by energy-efficient, healthy workplaces. Acknowledging high-profile companies like Google that are investing in these better workplace environments is meant to provide a source of confidence rather than deterrence. The fact that companies like Google are pairing energy efficiency and health benefits together in real estate decisions strengthens the confidence of other real estate decision-makers about an energy-efficient building’s value beyond energy cost savings.
Energy-efficient, healthy buildings are within reach for organizations of all shapes and sizes. Achieving much higher levels of energy performance in buildings is not only a technically feasible endeavor with existing technologies and policies, but also one that presents a lucrative financial opportunity.
It is time to start thinking about buildings as a source of value creation rather than a source of costs. It is time to reflect upon the risks of missing out on the bottom line benefits that energy-efficient, healthy buildings provide. And it is time to start allocating the full suite of internal and external funds available to organizations to accelerate investments in deep energy retrofits in existing buildings. Just Google it.
This article originally appeared on Greenbiz as part of RMI’s monthly Institutional Acupuncture column.
Images courtesy of Cristophe Wu / Google.