Does the case for sustainability still make sense in the current economic environment?

Brenna S. Walraven, Managing Director of National Property Management, USAA Real Estate Company

Abstract
For any business to have longevity, it must have practices and operations that are ‘sustainable’ in that they support the long and short-term success of the organisation. The practices and operations which produce a positive return on investment, usually above some internal hurdle rate determined by an organisation’s cost of capital from both debt and equity, are perpetuated and those that do not are eliminated as ‘wasteful’. Never could this line of thinking be truer than for sustainable ‘greening’ strategies for real estate owners, operators and organisations in general. But when considering greening efforts, the question: ‘how much does it cost’ always arises and more often than not in today’s economic environment, the response is: ‘not sure we need to be spending money on sustainability efforts this year’. But the question is not just about cost, because it concerns the full financial and strategic value proposition of improved sustainability of the operation, whether it is owned, leased or managed real estate. More often than not, there are significant cost savings associated with sustainable improvements that drive returns well above traditional business hurdle rates. Intuitively it makes sense that becoming more efficient, by eliminating waste and improving indoor air quality for example, should not only cost an organisation less (not more), but also should be as important as the changes that deliver these results. USAA Real Estate Company does not purport to have all of the answers, but it has been executing the business case for energy efficiency and sustainability for over a decade and this paper shares key concepts that have driven value and bottom-line results, making sense in any economy, particularly the toughest of ones.

Keywords
sustainability, greening, strategic efficiency, business case