It is rather obvious that the terms and philosophies of green and sustainability have become commonplace in various segments of our society. Hardly a day passes without a story on some component of them in USA Today, the Wall Street Journal, network news programs, etc.

The general public is being inundated with messages promoting the need to go green. In addition, advertising and public relations claims of “green-ness” for a wide variety of products is at an all-time high.

This has not escaped the land development industry. It is amazing how many building products are now claiming to be sustainable. And it isn’t just building products. Just within the last few months, we have received these new books to review: Sustainable Residential Development; Sustainable Urbanism; and, Sustainable Construction.

The land development community has not been – for the most part – an early adopter of sustainability. There are a number of reasons for this. The most plausible concern is that developers, already exposed to significant financial risks on a project, are hesitant to take on new innovations and concepts that they perceive could increase their risk further.

Developers have not been the only sectors of the industry hesitant to jump on the sustainability bandwagon at the early phase. The all-important financial, investing, and insurance stakeholders have also been waiting for a level of comfort before immersing into the sustainability arena.

It is clear that many financial firms and developers alike are now seeing opportunities where they once saw risk.

Today, venture capital firms seek to invest in start-up companies that produce environmentally sensitive products or in companies that demonstrate sustainability practices. Similarly, real estate developers look for projects that include high standards for energy-efficiency and use materials with minimal environmental impact. And individual investors avoid stocks in companies that harm the environment. Likewise, fixed-income investors – particularly those who seek to support community development – have found investments that support sustainable development.

Some companies, like Community Capital Management, headquartered in Ft. Lauderdale, Florida, have proactively sought to include in clients’ portfolios fixed-income investments that benefit the environment and make a positive impact in America’s underserved communities. They also had to ensure that the bonds they found measured up to their investment criteria by seeking to deliver market rates of return and meeting high credit quality standards.

“We identified several fixed-income investment opportunities that enabled our clients to support environmentally-friendly programs and projects while maintaining our rigorous investment standards,” explains Todd Cohen, president and chief investment officer of Community Capital Management. “Since then, we have continued to include investments in our portfolios that emphasize sustainability.

“One of our first such investments,” said Cohen, “provided capital to the Brownfield Redevelopment Fund in Cuyahoga County, Ohio. The monies were used to convert an abandoned commercial and industrial property into a youth intervention center built in accordance with ‘green architecture’ standards, which included a geothermal/heat transfer system for the majority of the building’s energy needs. In addition to the environmental benefit, this particular investment also provided a social benefit by giving at-risk kids access to much-needed extra-curricular programs.”

Hansen PSC, a land development company based in Menlo Park, Calif., specializing in land acquisition, entitlement and investment, has also modified its strategic approach to incorporate sustainability.

“Instead of creating newer subdivisions now,” explains David Garland, VP of Acquisitions and Land Development, “we feel obliged to go after the subdivisions and projects that are idle in the marketplace and modify the plans into sustainable developments to increase their marketability.”

According to Theddi Wright Chappell, CEO of Sustainable Values, Inc. “those who have adopted this manner of development (and a number of us analyzing it) believe it can be less risky, rather than more. It can actually be a means of mitigating risk; if your building outperforms industry norms and is truly ‘higher performing,’ it will be deemed a less risky investment over time.”

In fact, that is a primary reason that Fireman's Fund Insurance Company grants a five percent discount on buildings receiving a LEED® certification. One of the products offered by Fireman's Fund is Green-GardSM, for certified green building replacement and upgrades. They are also flexible, meaning that whether you've built green from the ground up, made green renovations to existing buildings, or would like to rebuild as green in the event of a loss, Fireman’s Fund will provide insurance solutions to protect both financial and environmental investments.

With the financial stakeholders in our industry adopting sustainability, it will certainly help the private developers become more comfortable with designing and implementing sustainable projects. SLDT