After watching this video from an old professor from college I found myself suddenly urged to blog on the topic of money and cash flow:
EBS recently hosted a presentation at our office about “Navigating the Road to Sustainability” which included presentations from Shayna D. Eskew of Green Property Solutions, Ken Kurtzig of iReuse and Matt Macko of Environmental Building Strategies. The night went well and ended up being a success with closing semi intoxicated discussions about Commercial Real Estate Valuation techniques and the difference between the dreaded word “payback” and the more robust Net Present Value.
The video above demonstrates how people feel about cash and the different types of cash – needless to say an interesting topic for everyone because we all have it and usually want more of it… But how does cash relate to sustainability and the decisions that are affecting our planet, our lives and our species vitality.
My hypothesis: Feelings of cash correlate directly with assumptions of sustainability investments.
At the end of the day a dollar is a dollar right? One dollar from one source is no different than the physical and power characteristics of a dollar from another source. They both empower a user with the ability to buy something with a market value of $1 – think McDonalds here…
But what happens when those dollars come from different sources and what happens when those dollars are accounted for dirrerently is at the heart of the sustainability adoption problem we are having.
When people value the cash they have in their 401K or child’s college savings account differently than they value the cash they have in their wallet (otherwise known as disposable income) you inherently have a problem of conscience. People will be unwilling to invest those 401K dollars (assuming all things being equally liquid of course) in investments outside of what they are dedicated to do – save up for retirement, child’s college savings, etc, etc. That creates a problem with energy efficiency and clean energy adoption because right now, no one has CASH on hand. Very few people have “disposable income” and let’s face it, the question of “do i have cash” is the number one we think of needing when we think about traveling, doing projects, or buying things. Energy Efficiency is no different – cash is king. No one has it and no one is willing to part with their savings, retirement or child’s savings account to invest in it. This is true even with the transparency of data out there telling us that investments in sustainability, energy efficiency and conservation practices yield the greatest return on investment possible in today’s society.
Yes you heard me say it – Sustainability offers the greatest Return on Investment – better than stocks, bonds, mutual funds, savings accounts, 401Ks, kitchen + bath upgrades to your overvalued McMansion, or corporate’s advertising budget. For proof look to the study I performed at the end of 2009 comparing the Return on Investment in Google stock being equivalent to that of a lighting retrofit.
Google is all too often considered one of the greatest investments of the 21st century but when you compare a purchase of it’s stock at IPO and sale of that stock 5 years later (end of 2009) to that of a lighting retrofit, you will find that the Returns are virtually equal. Roughly a 200% ROI (5 year horizon).
The video above about perceptions of money compared to our understanding of sustainability valuation helps answer the question of why we can’t adopt faster and saturate quicker as we move toward our goals of being a net zero energy economy, and a carbon free economy.
This is the 4th Step in our 12 Steps to a Successful LEED Project series. Please read the following and let us know what you think – feel free to comment or inquire through our website.
4.Record, Record, Record
This goes along with what was mentioned last week about sharing the successes we incur in life.For any LEED project, you, me, and everyone should know about what happened and why it was great.That includes the USGBC.They want to know as well and maybe you will get some bonus exposure from it.
Beyond that however we want to be able to make the case about costs and the more records we have, the more power a sustainability push can be. Costs are the bottom line-ROI, NPV, NOI, and IRR are often used to describe the financial success of an asset and while we are moving toward Triple Bottom Line thinking, we need to document how that thinking helped the true “bottom line.”We can use those tools to restructure how financial institutions, REITs, and Developers think about sustainability – so please Record – then SHARE!
So a couple things are on my mind this week. The main one is water however. To date this blog has focused quite a bit on energy, materials, and sustainability however we’ve lacked on the water subject.
Since Karolina let me on to this movie FLOW I’ve been newly recharged to change the world. I can’t express in words how important it is that you see this documentary. It discusses the critical nature of our current water supply in a global context.
It also discusses how multi-national corporations such as Coke, Nestle, and Pepsi are literally destroying aquifers where the “set up shop.” The worst part is they do this in places around the globe that can least afford it. Companies like Coke suck up water that would otherwise be provided for indigenous people and then bottle it and sell it back to them for profit. Lets just ask ourselves, “Does that make sense?” Does it make sense to pay ridiculous amounts of money for something that falls from our skies? Should we start paying for air? How about sunlight?
The greatest part about it is that this bottled water we drink is rarely ever better for our health and of course when you throw in the future impacts of the plastic bottle its stored in, you have a recipe for disaster.
Besides the film, I wanted to share some things the world is doing for water and its conservation.
In Orange County California, wastewater is being treated and discharged back into the ground water. It then is recaptured and used for drinking, showering and such. This is a really important concept because quite often wastewater and sewage is treated and dumped into our oceans. We are dumping potentially viable FRESH water in the salty oceans. An interesting note that Australia does this already – in fact I’ve heard that their President was shown on TV drinking a glass of treated water. Besides that they capture much of their rainfall and understand capture and reuse much better than Americans.
In other interesting news, Ben Block from Greener Buildings talks about how water efficiency is key to energy savings here. Also on Greener Buildings is an interesting article about a mobile transportation device for wastewater treatment. That article can be found here.
Thats about all I have for now – I will leave you with this interesting tidbit I learned…
An investment in wind power produces almost three times as many jobs as the same investment in coal power. And an investment in solar power produces almost four times as many jobs, and energy efficiency, almost thirty times as many jobs as coal power.
In keeping with our philosophy of writing every other day we decided to skip a week… Wait that makes no sense – well true. But in our defense it was a week full of vacation time, powder skiing and a Holiday.
So the title Friedmans on my mind is reflective of the fact that I’m about half way through his book, “Hot Flat and Crowded.”
The main premise of the story is the demonstration of what has undergone in America in the last 30+ years and why it is not in any way sustainable. He brings up 3 important topics in the first several pages.
One: The US has become a country that has disconnected themselves emotionally from the rest of the world and in doing so become a world where we “export our fears” instead of exporting our “hopes.”
I feel like this is a pretty important issue today. We just decided to spend more money overseas in this stimulus package and in doing so send more troops to fight people we truly don’t understand (and don’t care to which is worse). We aren’t making an investment in ourselves when we go to fight. Where is the return? Maybe you could argue its in the safety for our future generation but what you need to ask yourself is, “is going around swinging swords and slinging guns a way to make friends?”
Two: “dumb as we wanna be.” A motto our previous President follow to a T. It’s the ideal that we can get to solving the problems ruining our way of life when we feel like it – in doing so we’ve placed this massive chip on our shoulders that has influenced every decision for the last 10+ years.
How many people do you know who bragged a few years ago about how well they were doing in the market or how much value they had in their two houses, or how they were getting into the “fix-it and flip-it” market. We really got out of control cocky and it came crashing down on us.
Three: “nation building at home” – Friedman says this one gives him hope. I’m guessing its because we still under all that cockiness have the ability to recreate ourselves and invent new ways of coping. Hopefully those new ways don’t come in the form of something as ridiculous as mortgage backed securities. But he has a point. America is working to solve the problems we have today – unfortunately it is coming from the bottom. This bottom up approach is great but this country has made it so difficult to see the bottom up survive and blossom – the incentives aren’t in line. The real question is when will they be? When will the administrations of Washington realize that innovation is what we are great at and small business operations are an enormous part of our philosophy and heritage. We need to cherish this and remember where we’ve come from and how we grew.
So I never like to give away trade secrets but it isn’t like this puppy should be locked away in some vault – it really isn’t all that secretive. And besides our proprietary information involves a much much more conclusive approach to sustainability (just kidding we use this calculator all the time!)
You wouldn’t believe it but there are so many tools out there people can use to analyze what “greening” strategies can do for your life, health and bank account. Below is just one of those strategies … oh and several of my opinions of course
This tool is quite powerful and here is why:
1. LED’s are better than CFL’s – especially for new construction. When implementing a lighting plan for your new office, building or home you need to be spec’ing for LED. Below are a few links that may be helpful when trying to understand how incadescent, CFL, and LED’s work. They are quite different and you should read up on the differences. Financially they make sense over the long term – big time sense!
2. CFL’s are terrible choices in the long run but like everything we need a game changer – the government implemented the ban of incandescent bulbs which is great -we are going to save bundles and gobbles of money but destroy our oceans and poison our children in the meantime. This law is about as smart as the government saying lets all put lead paint on our walls or lets insulate with asbestos. The fact is that mercury has been phased out of thermostats yet we’ve all the sudden decided its ok to re-implement its use in every lighting fixture in America. Sounds good to me!
3. LED’s last for over 6 years – that is if you leave them on 24 hours a day/ 7 days a week – THAT IS SIX times longer than CFL’s are rated for. Did I forget to mention they use half the energy a CFL does.
Another quick note we often forget – 94% of the energy an incandescent bulb uses is lost as heat. LED’s don’t get hot!
Seriously take a look at this calculator and tell me they are fiscally irresponsible and I’ll tell you your crazy.
The numbers make sense, the color rendering and lumen output make sense, the dim ability (not all CFL’s can dim) features and spotting possibilities make sense yet our government mandates something that doesn’t. What a f–ing surprise – although it was the Heckuva Job, Bushie guy who designed the ingenious plan. I mean you can’t blame a Texan for trying right. . .
Until next time – change out those incandescent s already would ya!
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