By Thomas Kostigen
Leadership in Energy and Environmental Design, or LEED, certification is the gold standard for green building worldwide. It shows a strong commitment to environmental considerations, and has protocols that span energy efficiency, water conservation, and other measures that mitigate a building’s impact on the environment (siting, shading, material use, etc.).
Building and construction account for nearly half of all the carbon emissions in the world, and the use of energy and water in buildings emits nearly 30 percent of emissions according to the World Green Building Council.
LEED buildings mitigate those impacts and can help companies get to net zero emissions, a goal that many environmental, social, and corporate governance (ESG) investors look for when deciding where to invest. Indeed, BlackRock, the largest money manager in the world, says it will stop investing altogether in companies that do not have a positive plan for the climate.
That’s why whether or a not a company’s offices are “green” could be a strong indicator of whether they will have an attractive investment future.
Shareholder resolutions and even the Securities and Exchange Commission are increasingly holding public companies accountable for their reporting on climate change. And the reason that is happening is because climate change is being considered an existential risk to business operations. If a business doesn’t have an adaption or resiliency policy, it is deemed to be more of a risky investment than, say, a company that takes into account all the catastrophic possibilities that climate change brings about: flooding, heat waves, super storms, and more.
The US Green Building Council has a number of ratings and indicators on its website. It breaks down LEED certified square feet by state and, in the past has listed which financial services companies have the best green footprints.
Wells Fargo, Bank of America, and Citi held the most square footage with the most certifications, according to the USGBC. (Wells Fargo has a massive 17 million square feet of LEED certified space at 193 locations across the US.) And Bank of America holds more than 15 million square feet of LEED certified space. The numbers drop to half that amount and less from there. Citi, for example, holds 8.5 million square feet of LEED certified space.
In any case, the numbers and certifications can shift year to year, and a good financial advisor could help sort through the commitments. Office space may not hold the same weight as business operations like oil and gas production that intrinsically produce negative impacts on the environment, but offices are where, prior to COVID-19 lockdowns, many of us spent huge amounts of our times and, in turn, natural resources.
To be sure, the pandemic has changed where we spend those resources now. We’ll likely return again to more of a working office environment soon. Which is why it’s important to look at what can make that return more amenable to the environment — and ESG investors who will be gauging whether at-home or at-office working better suits the world.
According to a recent report from Massachusetts Institute of Technology (MIT), “if remote work continues through the end of 2021, the global carbon footprint could grow by 34.3 million tons in greenhouse gas emissions. To give a sense of the scale: This increase in emissions would require a forest twice the size of Portugal to fully sequester it all. Meanwhile, the associated water footprint would be enough to fill more than 300,000 Olympic-sized swimming pools, and the land footprint would be equal to roughly the size of Los Angeles.”
Companies may want to LEED in another direction.
Thomas Kostigen is a contributing writer to MyPerfectFinancialAdvisor, the premier matchmaker between investors and advisors. Thomas is a best-selling author and longtime journalist who writes about environmental, social, and governance issues.