Bankers are all about the money-and saving money can be just as good as earning it. That's why banks like PNC Financial Services and Bank of America are at the forefront of the green-building construction craze, which proponents claim can cut building operating costs, increase building values, boost occupancy ratios and improve return on investment. Other notable players include Goldman Sachs and Wells Fargo.
Those numbers would be compelling in any industry, but they're especially so in the hyper-competitive financial services sector. According to the U.S. Green Building Council, more than a half billion square feet of U.S. commercial space has been certified as "green" by the Leadership in Energy and Environmental Design (LEED) rating system, and the banking industry is one of the top five leaders of the movement.
U.S. buildings account for 39 percent of the nation's total annual energy consumption, according to the U.S. Department of Energy. Commercial buildings are a prime suspect: Such structures cost 10 times as much to operate over 100 years - the typical lifespan - as they cost to build, the DOE says.
"Bankers are strong stewardships of their own corporate values," says S. Richard Fedrizzi, president and CEO of the U.S. Green Building Council. "And bankers understand money. We are living in a world where green buildings are not just nice to do, but is really the only thing you should be doing. The great majority of practitioners can build a building for not a penny more than conventional construction."
The reduction in electricity, gas and water expenses and waste products "has a strong connection to human health and productivity and the way customers perceive the space as well," says Fedrizzi. "[Consumers say] 'How do I feel about my relationship with this bank at this moment?' There's a better connection." He pointed to a recent study that indicated consumers spent seven times more in a green setting, which contained optimal temperature, lighting and air quality.
PNC Financial Services is a bank pioneer in this movement with its 647,000-square-foot steel, stone and glass PNC Firstside Center overlooking the Monongahela River in Pittsburgh, which opened in fall 2000. The bank's annual utility budget on the building, predominantly a back-office facility, is only $1.5 million, 26 percent less per square foot than one of the bank's standard buildings, according to Gary Saulson, director of corporate real estate.
All of the 27 branches built since then-and seven more now in the planning stages-are green, he says. In construction costs alone, each 3,650-square foot branch costs between $1.3 million and $1.4 million, about $100,000 less than a comparable building of its peers and each saves between 25 percent and 35 percent in operational expenses. "For shareholders, there's tremendous payback," he notes. "From a marketing standpoint, we've been the first green building in every community we've built in and that's generated a tremendous amount of excitement."
And when Three PNC Plaza opens in late 2008, it is expected to be the largest environmentally friendly, mixed-use building in the United States. At least 50 percent of its structural steel, carpet and paint materials will be made from green or recycled materials. The $170 million project will include 11 floors of office space-half to be occupied by the bank-with a 185-room hotel and 30-unit condo development.
In 2008, Bank of America expects to open its green Bank of America Tower in midtown Manhattan, which will house its global corporate and investment banking, wealth and investment management and consumer and commercial-banking businesses, including six trading floors. The tower, expected to be the city's second-highest skyscraper, will be the first high-rise to strive for LEED platinum designation, says Mark Nicholls, corporate workplace executive of BofA. To be constructed largely of recycled and recyclable building materials, the building features filtered under-floor displacement air ventilation, double-wall technology and translucent insulating glass in floor-to-ceiling windows for maximum light.
It also will include an onsite 4.6-megawatt cogeneration plant aimed at providing a clean, efficient power source. Its gray-water system is expected to capture and reuse all rain and wastewater and planted roofs will reduce the urban heat-island effect. Taking advantage of heat energy from the cogeneration plant, a thermal storage system will produce ice in the evenings, which will reduce the building's peak demands on the city's electrical grid. Daylight dimming and LED lights will reduce electric usage, while carbon dioxide monitors automatically introduce more fresh air when necessary. Architect Robert Fox has said "greening" the 2.2 million-square-foot building will add two percent to the $1.3 billion projected cost.
"This is a competitive advantage," explains Nicholls, who says the bank expects "substantial savings," particularly in water and electricity usage, though he declined to provide specific figures. "We're very serious about our core values, which is doing the right thing. And the right thing to do is provide leadership to the environmental community because we have the resources to do it. It's also the right thing to do for our shareholders. It's the right thing to do for our associates, because there are lots of things we're doing in the interior that will be differentiating and will allow us to attract the best and brightest."
A unique under-the-floor air-filtration system will allow employees to individually control the temperature of their workstations. "Fifty to 60 percent of people are either too hot or too cold," he says. "With this, employees will be able to adjust the temperature by five or six degrees." And the filtration system is designed to filter out 95 percent of particles from New York City air and expel it back into the neighborhood. "It'll be cleaner than the air we brought in," he quips.
Nicholls says the bank is waiting until the building's completion to decide if it will make " a universal commitment" to building only green buildings in the future. No new green buildings are planned, although the refurbishing of the bank's 15-year-old Bank of America Corporate Center, which was designed by I.M. Pei, is expected to be partially certified as green.
Going green has had undeniable marketing appeal. "Our green buildings are a point of interest and pride in the community for residents," says PNC's Saulson, who notes that the green framework has prompted the bank to revise its view of all construction plans.
For example, branches that used to automatically include 60-gallon water tanks now get only five-gallon ones, since larger ones are deemed wasteful. "Is that a green component or one that's fiscally responsible?" he asks. "It's both. That's an example of something you don't get LEED points for, but from a shareholder, employee and civic perspective, you should be doing."
Fedrizzi says he expects more banks to jump on the green-building bandwagon. "This has obvious marketing appeal, with 'Hey, look at us. We're a green organization," says Fedrizzi. "It gives them something to speak to their shareholders about: What are the values of this organization? People are looking a lot closer these days at whether companies are being true to their values. If you're going to say you're a socially conscious company, people are asking: 'How do you do that?' Green buildings are tangible and real. And you see some terrific results. ...The way that bankers analyze everything, no wonder they've embraced green buildings. It is common sense and the right thing to do economically." (c) 2006 U.S. Banker and SourceMedia, Inc. All Rights Reserved. http://www.us-banker.com http://www.sourcemedia.com