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Sustainable Development
November 2004 • Issue No. 59 • Volume XIX • Number 3
The What, Why and How of Sustainable Development
Economic Benefits Of Embracing Sustainability
By Julie Hoover, New York, New York, 1-212-465-5101, hoover@pbworld.com

While the three components of sustainable development, environmental, economic and societal well being, are interlinked, it is useful to examine each one individually. This article, adapted from an invited presentation to UITP, the international transit association, focuses on the economic benefits of sustainability from the perspective of our firm. While company greening is often promoted as being the right thing to do, PB’s experience shows that it also makes good business sense as well.


PB started on the path to sustainability in a highly focused firm-wide way in 2002 with an initial campaign to illustrate its benefits to senior management. This was soon followed by steps to illustrate to all our professional employees the advantages of sustainable development and the need to adjust the way they went about their work.

The initial undertaking involved numerous market and trend analyses, formal presentations and private meetings to answer questions and address concerns. As a result, we have almost unanimous senior management support of PB's commitment to be a leader in sustainable development.

Sustainability Benefits Outweigh Its Cost

Managers had a wide variety of reasons for supporting sustainability, but most were business-related. Tom O'Neill captured most of their sentiments in his comments for a video prepared for widespread employee communication: “Sustainable design saves money for our clients and for PB through reduced life-cycle costs, and it provides value through resource conservation and in delivering the right decision for future generations. Clients are not likely to adopt a sustainable approach solely because it is the right thing to do, however, and our job is to show clients the savings and productivity that can be realized from a better designed project.”

To date, we made devoted considerable resources to managing our Sustainable Development Initiative:

  • Developing and implementing global training programs
  • Disseminating corporate communications
  • Greening our offices
  • Celebrating Earth Day by asking all employees to make one pledge to make our planet more sustainable
  • Bringing together 150 of our top professionals to discuss sustainability at PB's 2003 Technical Exchange Program
  • Establishing a research fellowship focused on sustainable development.

This investment has yielded handsome payoffs in the areas of client demand, internal cost savings, recruitment and retention, and client service.

Client Demand. Increasingly, our clients are asking for “green” services and we predict the demand will accelerate. Examples of some direct and indirect “messages” we received from clients include the following:

  • New York City Transit requires that all its consultants incorporate its “Design for the Environment” guidelines into their work and would like its consultants to have ISO 14001 certification and/or strong strategies for advancing sustainable development.
  • Portland, Oregon's transit agency, Tri-Met, issued a request for proposal for a design/build procurement of a light rail transit project and stated in its procurement guidelines that 20 percent of its proposal evaluation would be based on how well the bidding firms addressed sustainability. (Note: there were other criteria for the interview.)
  • The Oregon Department of Transportation typically scores sustainable development approaches higher than other approaches in consultant-selection evaluations.
  • More and more we are seeing a requirement for one or more Leadership in Energy and Environmental Design (LEED)-accredited people on the proposed team when buildings are involved in U.S. federal procurements, and any federal building with construction costs in excess of $500,000 must be LEED- certified1.
  • In parts of Australia and Europe , sustainability is practically a way of life and is implicitly required for all infrastructure projects and planning activities. There is also burgeoning interest in sustainability in several countries in Asia, Latin America, and the Middle East .
  • Clients are showing considerable interest in our highway, transit, and buildings sustainable development training courses ( see Related Web Sites, below)

Clearly, to be competitive in our global marketplaces, it is imperative that we are able to offer our clients the sustainability services they will be demanding.

Internal Cost Savings . Sustainability practices result in operational cost savings. One way of achieving these savings is through the implementation of Environmental Management Systems (EMSs) and/or ISO 14001 certification. PB has 22 offices with the ISO 14001 credentials—all the UK offices, Singapore , and New York , with many others in the pipeline.

The Bristol office has already realized cost savings of approximately £12 per employee or about £20,000 total in its first year and anticipates considerably greater savings as other initiatives on energy, paper, and travel savings are implemented. In the U.S., we are planning to re-program all copy machines over time for two-sided reproduction, cutting our paper purchasing by about 40 percent—and saving some trees. The Portland office plans to roll out a new “green” initiative every other month2.

An example of how other internal cost savings can be realized comes from New York City Transit, which has endorsed sustainable development and with only part of its program implemented has saved an estimated $2 million in energy cost in the first year. Because its actions will reduce environmental risk, New York City Transit is also exploring lower insurance rates.

Recruitment and Retention. Now that we are telling the outside world that we are serious about sustainability, we are starting to receive a steady stream of resumes from highly qualified people in many areas of our practice—construction management, power, transit, planning, etc. This can result in significant savings in recruitment and hiring. In the past, we spent approximately $250,000 each year in the U.S. alone and a far greater sum throughout the company on these activities, including print advertising, e-recruitment, career fairs, etc. The cost of hiring a very senior person can range from $25,000 to $75,000.

In addition, some of our best employees have expressed excitement about green planning and design and have initiated supportive actions on their own, such as:

  • An internal e-mail communications network about sustainability issues that now has more than 400 subscribers
  • Spontaneous corporate social responsibility programs in various offices
  • A publication on sustainable development produced by our emerging professionals
  • Dozens of brown bag luncheon presentations given by some of the participants of PB's 2003 Technical Exchange Program.

When people are motivated and inspired by what they do, they tend to stay. One of the most gratifying examples of employee retention is the case of a highway engineer in the UK late in his career who attended the Technical Exchange Program. He announced subsequently that although he had intended to retire in April 2004, he was postponing his plans because he was so excited about practicing sustainable development in his work.

Client Service. We are currently working on new models of life-cycle costing and other costing models to illustrate to clients that small extra up-front investments in sustainability might result in substantial subsequent operational savings. Our view is supported by the following:

  • A study of 179 U.S. firms by three university professors showed that better environmental performance is significantly and positively related to higher returns on investment and earnings growth.
  • PriceWaterhouseCoopers' 6 th Annual Global CEO Survey showed that:
  • Seventy-nine percent of CEOs agreed that sustainability is vital to the profitability of any company, compared with 69 percent who held that view in the previous year.
  • Seventy-one percent of CEOs said they would sacrifice short-term profitability for long-term shareholder value when implementing a sustainability program.
  • The main factor driving sustainability is concern about reputation and brand.
  • Sustainability is an integral part of value creation, not an add-on or a simple cost item.
  • A recent California study found that the initial costs of green buildings are 2 percent higher but the long term benefit-to-cost ratio are 10 to 1.
Conclusion

There are numerous business reasons for embracing sustainable development. Green buildings, the most advanced PB practice area, has much quantitative evidence that green design is cost-effective. As it becomes clear that clients in other PB practice areas might benefit similarly from sustainable design, we can perform an invaluable service by communicating economic benefits in compelling ways, thereby steering more of our clients toward more sustainable solutions.


Julie Hoover leads PB’s Global Sustainable Development Initiative. She also serves as the firm’s Industry Leader for both planning and sustainability, working to promote good practice in national/international forums and internally.

Related Web Sites
• BREEAM: http://www.breeam.co.uk/
• SDI Buildings Workshop: http://www.pbworldnet.com/launcher.asp?action=5&v=3&w=747025&x=-1&y=540&z=747025
• SDI Highway Workshop: http://www.pbworldnet.com/launcher.asp?action=5&v=3&w=805105&x=-1&y=540&z=805105
• SDI Transit Workshop. http://www.pbworldnet.com/launcher.asp?action=5&v=3&w=805107&x=-1&y=540&z=805107
• U.S. Green Building Council LEED: http://www.usgbc.org/

1Please see “Overview of Sustainable Development Standards Used Around the World,” a following article by Suzanne Johnson Crocker for information on the LEED certification and other certifications used in other countries.

2For more information, see “Portland Office Gets Greener and Aims for ISO 14001 Certification” by Patrick Sweeney.

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