Tom Paladino the future of sustainability

Can we remember a time when there weren’t green buildings and a sustainability movement? It seems like light years since the U.S. Green Building Council was formed.

Yet it’s been only two decades and the USGBC is celebrating its 20th anniversary. Our congratulations to Rick Fedrizzi, the CEO and Founding Chairman of USGBC, and his entire team.

How it Started and What the Future Holds

As an early leader in the green building movement, I’d like to share my thoughts with you about:

  • How LEED has evolved
  • Why the 2008 financial “meltdown” may have been a good thing for the sustainability movement
  • My vision for the next 20 years

Early Pioneers

Paladino and Company isn’t far behind the USGBC in longevity. I began my firm almost 20 years ago and recall my first contact with LEED, when it was simply an alphabetical list of environmental impacts – from asbestos to xeriscaping – that buildings create. But that point of view is hard to apply to the construction industry. That’s not how it’s organized.

Lynne Barker, an early LEED evangelist, who worked as a sustainable construction manager at Sellen Construction in Seattle, recruited me. She became aware of my work in trying to make buildings perform better. Along with other building science people, we embarked on creating a new vocabulary and common language.

The sustainability movement quickly gained momentum and, in 1998, we joined the U.S. Green Building Council so that we could exchange knowledge and bring a share of voice advocating for sustainable business results. We were one of those 200 or so early volunteers that created LEED, as you know it, at the Pocantico retreat.

I’m proud that a short time later Paladino and Company wrote the book on LEED, so to speak — the first LEED Reference Guide. We were fortunate to direct the LEED Pilot Program and initiated the LEED Workshop series.

Together, Steve Keppler, another early pioneer, and I delivered the very first LEED workshop ever. Steve (whose firm merged with Paladino last year) was the first project manager for LEED at the USGBC. Today, our companies have taken over 400 projects through certification and provided technical review of more than 700 LEED applications.

Paladino is now guiding development of the LEED v.4 Reference Guide that will be launched later this year.

I was fortunate to be in the right place at the right time. My early training was as an engineer and I later earned an architecture degree. Engineers and architects began to collaborate to try to make buildings perform better. Seattle became the incubator for the green building movement.

The three big environmental impact issues in Seattle back in the late 1990s were protection and restoration of the spotted owl, old growth timber harvesting and salmon protection in waterways in an urban environment.

Seattle was experiencing urban sprawl and was confronted with reconciling the environment with economic growth a decade before most cities.

Establishing Best Practices

Those of us who were involved with LEED from the beginning realized that a simple list of environmental impacts wasn’t enough. Seattle had practical issues around energy usage. Other cities had different issues around buildings. Upon reflection, the conversation around sustainability was about creating a common design language and a methodology for achieving better performance.

This was considered revolutionary: linking methodology and performance. The need was so great that the real estate industry sucked it up like a sponge, incorporating the evolving methodology into the design of buildings and commercial interiors.

As the methodology of the construction industry changed, USGBC continued to grow as the third-party verification service you could depend on. LEED provided a measurement for quality control in an industry that didn’t have that kind of quality control before.

Historically, industry practice was to make it first and apply quality assurance after the project was completed. Nobody really thought much about quality assurance. But if you applied LEED standards you would achieve quality control and improve building performance.

However, many owners then and now don’t measure if quality has actually been created, even after LEED certification, which brings us to the next frontier in sustainability.

The 2008 Meltdown in Construction

The 2008 financial meltdown was a disaster for the real estate industry, halting many projects. LEED expansion hit the pause button due to the huge drop in commercial real estate activity over the past five years.

The slowdown caused many in the industry to rethink their priorities for sustainability. What many people feel is needed now is a return to our roots. Owners are focusing on quality and the business value that real estate brings to the enterprise. Paladino is being asked by clients to create new analytics around business value and green real estate.

It’s almost like going back to the future. Fortune 500 real estate executives acknowledge the positive benefits of green building, but there is a lot of traction around core business value and a desire for less compliance drag from LEED, which USGBC is addressing.

There is a growing movement to transform the real estate institutional value chain created by enterprise planners, including property acquisition, market demographics, customer engagement and allocation of capital.

Here is the question building owners are asking about the future: How does real estate add value to our enterprise?

Envisioning the Next 20 Years

There will be a transformational focus on linking green real estate to institutional value chains. This will lead to four major changes in how an enterprise approaches real estate.

The first will be the emergence of a very senior C-suite real estate professional within the enterprise that will oversee and link all its sustainability programs, from corporate social responsibility to real estate construction. For the most part, that person doesn’t exist now. There is a lack of overall strategy for sustainable real estate portfolio programs. No one is measuring if the real estate spend creates business value for the organization.

Second, if an enterprise uses sustainability as one its business drivers a different kind of assessment will be needed. If one green building is good, then what processes need to be changed so that all our buildings go green?

In programming a building, the owner needs to take into account new spaces, new activities, new employee populations and demographics. In budgeting for a project, new technologies need to be accounted for in unlikely places.

Typically, you see a lot of money being spent on energy systems in the mechanics of a project, whereas in a green building the bulk of the budget may be invested in the skin of the building which impacts the energy system. The rising Tower at PNC Plaza is a perfect example.

The third change is that these new technologies will require a different kind of building operator than most enterprises have on staff. The new operator is someone with the analytical skills to evaluate Big Data, the massive amounts of information that enterprises accumulate that can serve as the basis for innovation, differentiation and growth. The new operator is someone who can understand and intuit the power of Big Data instead of working off a checklist.

The fourth big change is to understand how sustainability creates business value for the enterprise, both top and bottom line. For example, if you know that a green building enhances productivity of the core workforce then your top line increases because the employees present and working are more productive.

A building that is healthier incurs less personal time off (PTO), and reduces health care costs, thus improving operating income by decreasing your expense line.

Those whose main occupation is sustainability have many ideas for how to change processes and make buildings greener. Moving forward, the newly empowered high-level professional that oversees the real estate value chain will need the skills and tools to evaluate these new processes, based on reliable data, to prove the business value of sustainability to the enterprise.

A nationally recognized leader in sustainability, Tom Paladino is the founder and CEO of Paladino and Company.

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