The World Green Building Council has published a free interactive report setting out the economic and social benefits of constructing sustainable buildings. The 114-page “Beyond the Business Case” report was launched at COP26 and may serve as a valuable tool for architects to communicate to commercial clients the financial and social value of investing in environmentally-conscious projects.

“A growing body of evidence has shown that unmanaged climate change generates significant value risks for investors and that the inclusion of climate factors can improve returns,” reads the report. “Consequently, financial markets are increasingly directing their investments towards projects and companies that guarantee (in addition to economic profitability) the achievement of social and environmental development goals.”

The report puts forward a range of client-facing economic benefits for green buildings, noting that green buildings are of high value due to “lower operating costs, higher occupancy rates, high rental income, and avoiding financial penalties for carbon emissions, which makes green buildings a better credit risks asset and better collateral.” 

Reinforcing the potential for stronger returns on sustainable buildings, the report cites research by JLL in 2020 which found that sustainable buildings in central London held a rental premium 6-11% higher than the market average and that buildings with a BREEAM rating of Outstanding/Excellent had higher building occupancy than those with BREEAM ratings of Very Good.  

Designing green buildings also allows clients to tap into the rapidly-growing avenues for green finance from governments, banks, and institutions. The report notes that in 2019, $66 billion of green bonds were used to finance or refinance green buildings, or as loans for green buildings. The access to green finance has also instilled greater confidence in sustainable buildings in the eyes of banks and lenders, as has lender recognition that sustainable buildings “can have a higher value than standard structures due to lower tax, regulatory, and reputational risks.”

The report also seeks to combat the view that sustainable design and construction come at a cost premium. “As much as 32% of landfill waste comes from construction sites, with 13% of materials delivered to a construction site being sent directly to landfills without having been used," the report notes. WBGC argues that avenues such as passive design principles, energy-efficient equipment and storage, and modular construction, can lessen the demand for material and energy input during construction, with considerable cost savings.

“For the asset owner, realizing maximum value depends on choosing the right materials and construction techniques that are low cost to dismantle, reuse and recycle,” the report notes. “If a building is examined in advance with the goal of capturing value at the end of its use, the owner will be aware of the materials that have potential value and how they should be dismantled to preserve it. With this approach, financial value is embedded within the fabric of the building, to be accessed at point of deconstruction."

The full report is available to read for free here.