2. 12-May-06seppo.junnila@hut.fi Business Drivers for Green Buildings & Infra Dr. Seppo Junnila Helsinki University of Technology P.O.Box 9800, FI-02015 TKK, Finland email: seppo.junnila@tkk.fi

3. 2 12-May-06seppo.junnila@hut.fi Background Environmental sciences Economic theories Business indicators What green buildings & infra has to offer How to Boost Emergent Demand? Information and marketing New production philosophy User involvement Business concepts and value chainsContent

4. 3 12-May-06seppo.junnila@hut.fi Science about Green Buildings&Infra Services sector creates 70% of the value added in the world and is the fastest growing sector (World Bank 2006) Services is responsible for 40% of total industrial GHG emissions in the United States (Suh, ES&T, 2006) The office building (with infra) contributes roughly 30-55% to environmental impacts in services companies (Junnila, Int J LCA, 2006) Buildings account for 40% of world’s materials and energy flows (U.S. DOE 2002, UNEP 1999, Worldwatch 1995 )

5. 4 12-May-06seppo.junnila@hut.fi Economics about Green Buildings&Infra Building efficiency is economically the best short- term strategy for California to reduce climate change (Hanemann et al. 2005)

6. 5 12-May-06seppo.junnila@hut.fi Carbon market in EU In Europe, the size of carbon market is 20 000 – 50 000 million € (EU Emissions Trading Scheme) Suggestions both in UK that the building owners should be included (The Guardian, 6-Dec-06) Many of the UK's big businesses - including supermarkets, banks, universities, hotel chains, hospitals and government departments - would be forced to sign up to a carbon-trading scheme under proposals being drafted by ministers Gordon Brown… …cover all organisations with annual electricity bills of more than £250,000, or with electricity consumption above 3,000 megawatts - The Guardian, 6-Dec-06 -

7. 6 12-May-06seppo.junnila@hut.fi Business about Going Green Wall Street Journal, 23-Jan-07 In the US, a growing number of companies are pushing for a mandatory emissions limit, or "cap."

8. 7 12-May-06seppo.junnila@hut.fi Market Value of Green Companies

9. 8 12-May-06seppo.junnila@hut.fi Operational Performance of Green Companies Guenster et al. 2005 “The least eco-efficient firms show significant operational underperformance Eco-efficiency improves Return on Assets, more than 10 percent of the average ROA” “The survey results, as well as other available literature, corroborate the view that ISO 14001 accreditation confers economic benefits”

10. 9 12-May-06seppo.junnila@hut.fi Green BUILDINGS & INFRA can offer Buildings & Infra is a platform for businesses The best environmental improvement potential Good cost benefit ration Existing solutions Short reaction time

11. 10 12-May-06seppo.junnila@hut.fi What’s stopping the companies? 1.Business concepts and models The value chains and customers, fallacy of volume The Long Tail economy - NO blockbusters Products vs. Services – if you talk the talk be prepared to walk the walk User involvement - Remontti Reiska vs Jaana Pelkonen Leap into unknown for many organizations 2.Operational philosophy in construction industries Adversial relations Sub-optimizing, sub-contracting Defensive approach 3.Understanding and communication Biased toward smokestacks The common mind set Transformation of economies from manufacturing to services is a solution to the environmental problem

12. 11 12-May-06seppo.junnila@hut.fi Expenses 0 % 20 % 40 % 60 % 80 % 100 % Case ACase BCase CCase DCase E Other activities Facilities Environmental impact 0 % 20 % 40 % 60 % 80 % 100 % Case ACase BCase CCase DCase E Other activities Facilities Cost structure of the customer - Junnila, Facilities 2004

13. 12 12-May-06seppo.junnila@hut.fi Change in Operational Philosophy Some required attributes: Management based on long-term thinking Bring problems to the surface Add value to the end customer Level out the workload Get the quality right at the first time Standardize tasks for continues improvements and employee empowerment Respect your extended network of partners by challenging and helping to improve Mangement principles of the worlds greatest manufacture – Toyota!

14. 13 12-May-06seppo.junnila@hut.fi Understanding and communication - Nousiainen&Junnila, CIB Helsinki 2005 ElectricityWaterClimate ChangeWaste Facilities

15. 14 12-May-06seppo.junnila@hut.fiConclusion There seems to be a good business opportunity for Green Buildings and Infra Scientific evidence Economic theories Business success However, the competitive edge is narrowing... Technology innovations are needed but also 1.Business concepts and models 2.Operational philosophy 3.Understanding and communication Sustainable Communities is all about Maximum value by Minimum waste