Is there a business case for green office buildings?: Perspectives of institutional stakeholders in Australia

Whilst buildings are considered one of the largest contributors to climate change, they also offer major potential for greenhouse gas abatement (Levine et al., 2007). Climate Works Australia (2010) estimates that the built environment has the potential to contribute 11% of Australia’s 2020 least cost emissions reductions and that 77% of these emissions reduction opportunities will come from within the commercial sector. It has also calculated that the majority of these emissions reductions are net present value (NPV) positive to investors, even without a carbon price. Eichholtz et al. (2010) suggest that energy represents 30% of operating expenses in a typical office building, and is the single largest and most manageable operating expense in the provision of office space. Consequently, the built environment and the industry players that create, occupy and manage it have a vital role to play in limiting the detrimental effects of climate change and delivering a sustainable outcome in the future. This responsibility lies not only with developers and builders of green buildings, but also other important stakeholders such as investors, owner-occupiers, tenants, asset managers, valuers, financiers, governments and the community. However, a lack of understanding or information available to these various stakeholders regarding the economic benefits of green buildings may act as an obstacle to achieving this. This paper investigates whether there is currently sufficient, reliable information available to industry participants in Australia to make informed decisions regarding green buildings and sustainable development. Methodology: This involves surveying various industry participants across Australia in order to understand their current knowledge of and views on the economic benefits and costs of green buildings and comparing these responses with the empirical evidence gathered to date in Australia and around the world. Based on this survey of industry participants, the research reveals a perception or knowledge ‘gap’ regarding the business case for green buildings, potentially restricting the progress of sustainable development in Australia. This survey concentrates on commercial office buildings only, as most empirical research conducted to date on green buildings has been focused here.The empirical sample represents the views of many managers and other stakeholders of major institutional investments who are often not accessible to academic research.