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Being able to produce LCAs with your building designs, gives you the opportunity to contribute to various Green Certification Schemes.

With this advantage, not only would you be doing your part in the Climate Emergency, but you would also getting the opportunity to contribute to the design of Green Certified Buildings, which can often be seen as very attractive investment for various reasons that we will outline within this blog post.

💵 What Financial Incentives are there for Producing LCAs

Green Building Certifications

If you are a Structural Engineer with the ability to produce a Life Cycle Assessment (LCA) as part of your Structural Design, you put yourself in a good position to have the opportunity to get involved in the design of 'Green Buildings' through various Green Building Certification Systems.

These certification schemes can provide investors with a clear understanding of a building's environmental impact, energy efficiency, and overall sustainability, which can help them make more informed investment decisions.

As a Structural Engineer, by setting yourself up to contribute to these Certification Schemes in the form of producing LCAs for your designs, not only would you be doing you part in the Climate Emergency, but you would also getting the opportunity to contribute to the design of Green Certified Buildings. These buildings can often be seen as very attractive investment for various reasons.

🍃 What UK based Green Building Certification Systems Require an LCA as Mandatory?

BREEAM and HQM

BREEAM and HQM are two UK based Green Building Certification Systems which require a Life Cycle Assessment (LCA) as part of their certifications as mandatory. They are widely recognized and used in the UK as tools for assessing and promoting the sustainability of buildings and construction project.

BREEAM and HQM are often employed by a range of regulatory bodies and organizations for planning and assessing the sustainability of proposed developments. These bodies include Local Planning Authorities and UK Government Public body sectors to name a few. We will dive into the requirements of different authorities and jurisdictions, and their requirements in our following blog post(s).

📈 What is a BREEAM Certificated Building, and how can they be considered an "Attractive Investment"?

BREEAM (Building Research Establishment Environmental Assessment Method) is a leading sustainability assessment method for buildings and covers a wide range of environmental and social sustainability issues.

One of the mandatory requirements for BREEAM certification is to conduct an LCA of the building's environmental impact. LCA can contribute to credits in several categories, including Materials, Health and Wellbeing, and Energy. Up to 2021 it has been used to assess over £54bn worth of infrastructure assets.

Architects, and building designers have developed an increased interest in recent years with BREEAM, as certification is popular with private sector companies looking to improve their corporate social responsibility (CSR) and reputation, as well as public sector organizations and government bodies that are required to meet sustainability targets.

The most popular type of buildings to get BREEAM certification (by rank) are offices, retail, industrial, education healthcare and residential, but covers many other types of buildings such as hotels, leisure facilities, and public buildings.

📝 Studies on BREEAM and its Financial Benefits

Acquiring certification for a building can provide several financial benefits for investors, including

1. 📈 High Return on Capital Investment: For an investment of 0.1% to 10.1% of the total building cost for BREEAM certification, studies show that this can increase the asset value of a building from 10%, up to as high as 30%.
   1. Cost of BREEAM Assessment: A study by Sweett Group found that the cost premium associated with achieving a BREEAM rating can range from 0.1% to 10% of the total construction cost, depending on the level of certification sought and the type of building.
      1. For example, a basic BREEAM "Very Good" or "Excellent" rating for a building is likely to add around 0.1% to 2% to the total construction cost, while achieving a higher BREEAM rating such as "Outstanding" could add an additional 5% to 10.1%. In many instances, the additional cost of the BREEAM Assessment is likely paid back through a reduction in operating costs in utility savings within 2-5 years.
         
         
   2. Increased Asset Value: BREEAM provides an independent and recognized measure of sustainability performance that can be used to attract tenants, investors, and buyers
      1. A study conducted by the Royal Institution of Chartered Surveyors (RICS) found that BREEAM certified buildings in the UK had a 9% higher value on average compared to non-certified buildings. The study also found that buildings with higher BREEAM ratings had even higher market values, with a 16% premium for buildings with an "Excellent" rating.
      2. A study conducted by the University of Reading found that BREEAM certified buildings in the UK had a higher rental value and market value than non-certified buildings. The study found that BREEAM certified buildings had a rental premium of up to 6% and a market value premium of up to 10%.
      3. The 2013 report by the World Green Building Council making the ‘Business case for green building’, suggests that certified green buildings have sale prices increased by up to approximately 30% compared to conventional code-compliant buildings.
      4. A 2018 study by CBRE found that BREEAM certified buildings in the UK achieved higher rents and capital values than non-certified buildings. The study analyzed 1,800 office buildings in the UK and found that BREEAM certified buildings achieved an average rental premium of 6% and an average capital value premium of 19%
2. 📉 Reduced Operating Costs: BREEAM certified buildings are designed to be more energy efficient, which can result in lower operating costs over the lifetime of the building. This can be achieved through measures such as improved insulation, energy-efficient lighting, and HVAC systems that reduce energy consumption.
   1. A study conducted by BRE and Arup found that BREEAM certified buildings in the UK had a 25% lower energy consumption rate than non-certified buildings.
   2. Another study conducted by the University of Reading found that BREEAM certified buildings in the UK had an average of 21% lower carbon emissions than non-certified buildings.
   3. A study conducted by Sweett Group in 2014 analyzed 108 BREEAM-certified buildings in the UK and found that they had an average reduction of 22% in CO2 emissions, 23% in water use, and 33% in energy consumption compared to non-certified buildings. The study also found that BREEAM-certified buildings had higher rental values and lower void periods.
   4. Another study by the UK Green Building Council found that BREEAM-certified buildings had on average 27% lower operational costs and higher levels of occupant satisfaction than non-certified buildings, and helped to reduce embodied carbon by an average of 36%.
3. 💰 Access to 'Green Finance': Many financial institutions offer preferential lending rates or other financial incentives for buildings that meet high sustainability standards such as BREEAM certification. This can include green bonds or other sustainable finance options that can help to reduce the cost of financing the building.
   1. In 2017, HSBC announced a Green Loan program that offered preferential lending rates to UK businesses that invested in energy efficiency and renewable energy projects. To qualify for the program, projects had to achieve a minimum BREEAM rating of "Very Good" or an equivalent standard.
   2. The Royal Bank of Scotland (RBS) offers a Green Loan program that provides discounted interest rates to UK businesses that invest in energy efficiency and renewable energy projects. To qualify for the program, projects must achieve a minimum BREEAM rating of "Very Good" or an equivalent standard.
   3. The European Investment Bank (EIB) offers loans for sustainable building projects that meet high environmental standards, such as BREEAM certification. The loans offer competitive interest rates and can cover up to 50% of project costs.
4. 📣 Improved Marketability: BREEAM certification can help to improve the marketability of a building, as it provides a recognized measure of sustainability performance that can be used to differentiate the building from competitors. This can be particularly important in sectors such as commercial real estate, where tenants are increasingly looking for sustainable and environmentally responsible buildings.
   1. A 2017 survey by CBRE found that tenants are increasingly demanding sustainable buildings and are willing to pay a premium for them. The survey found that 80% of tenants are willing to pay more for space in a sustainable building, and 60% of tenants are willing to pay up to 10% more.
   2. The 2013 report by the World Green Building Council making the ‘Business case for green building’, suggests that BREEAM can increase rental rates for buildings by up to 24.9% compared to conventional, code-compliant buildings.
5. ⚠️ Reduced Risk: BREEAM certification can help to reduce the risk associated with building ownership and operation, as it provides a framework for assessing and managing environmental risks such as climate change and resource scarcity. This can help to reduce the risk of regulatory non-compliance, reputational damage, and other environmental risks that can impact the value of the building.
   1. A 2018 study by the Better Buildings Partnership (BBP) found that BREEAM certification can help to reduce the risk of obsolescence for a building. The study found that BREEAM certification can help to future-proof a building by ensuring that it meets current and future sustainability standards, and by providing a framework for ongoing improvement.
   2. A 2016 study by BRE Global found that BREEAM certified buildings have lower operational costs and are less risky to operate. The study analyzed 200 buildings and found that BREEAM certified buildings had lower energy, water, and maintenance costs, and had a lower risk of health and safety incidents.
   3. A 2017 report by the UK Green Building Council (UKGBC) found that sustainable buildings, including those with BREEAM certification, are more resilient to climate change and natural disasters. The report found that sustainable buildings are better able to withstand extreme weather events, such as flooding and heatwaves, and are less likely to suffer damage or disruption.

Commercial and institutional buildings are likely to benefit most from BREEAM certification due to their higher operating costs, the importance of tenant satisfaction and retention, and the potential for enhanced reputation and marketing.

📝 What other Green Building Certification Systems are in the UK?

Life Cycle Assessments can contribute to many other certifications within the UK, such as:

1. HQM (Home Quality Mark)
   HQM certification requires an LCA and may be particularly beneficial for housing developers and investors looking to differentiate their residential developments based on the overall quality and sustainability of the homes.
   As well as benefits to investors, studies and analyses suggest that HQM certification can provide financial, environmental, and social benefits to homeowners and occupants, such as increased property value, lower running costs, and improved comfort and wellbeing.
   
2. LEED (Leadership in Energy and Environmental Design) certification
   While not as widely used in the UK as it is in the US, LEED is still a popular green building certification system. Although LEED does not explicitly require an LCA, an LCA is required for certain credits under LEED.
   
3. PassivHaus
   PassivHaus certification is mostly applicable to single and multi-family homes in the UK, social housing, schools and office buildings. Primarily focused on reducing operational energy. While Passivhaus does not explicitly require an LCA, certification can include the use of a LCA to evaluate the environmental impacts of a building over its entire life cycle.
   
4. WELL Building Standard
   WELL Building Standard is a relatively new certification system that focuses on the health and well-being of building occupants. While it does not require a specific LCA study, it does require a Life Cycle Thinking (LCT) analysis as part of its Materials concept which evaluates the environmental impacts of a product or material throughout its life cycle.

🍃 MasterSeriesLCA Free Trial 🍃

Historically Green Certified buildings command higher design fees compared to conventional buildings, in many cases these additional early up-front fees are one of the main barriers in investors in engaging in Green Building practices.

The adoption of digital technologies such MasterSeriesLCA.com, will help break though these barriers for improved design and cooperation. MasterSeriesLCA will be able to expediate your LCA analyses for your Structural Design, reducing your associated fees and therefore risk for investors.

MasterSeries LCA is a tool that allows you to manage, track and compare the impact of resources used in construction projects with the aim of minimizing carbon emissions