An article in the April 2007 issue of CFO Magazine titled "Cleaning up Carbon" addresses the pressure that most corporate users will soon have to face regarding CO₂ emissions.  Peter Breitstone, the CEO of insurance giant AON's Environmental Services Group, says "Each company is going to have to deal with some sort of [CO₂] regulation.  We know that it is coming."  The Investor Network, a coalition of enviro-friendly investors with more than $200 billion in assets recently published a list of 10 major offenders.  The list includes the usual energy company suspects, plus a few you might not expect such as Wells Fargo (the group says that unlike JP Morgan and Bank of America, WF hasn't come up with a plan to reduce carbon emissions from their everyday business practices), and Bed, Bath, and Beyond (Investor Network says the retailer hasn't disclosed its strategies on how to improve energy efficiency).  So has YOUR firm disclosed your strategies on how to improve energy efficiency?  No?  Read on.

Look, we all understand pressure like this being placed on companies like ExxonMobile, however when retailers and financial service firms come under fire, nobody is safe.  Most greenhouse gas regulations so far have required annual reductions eventually reaching 1990 levels.  In CA, Governor Schwarzenegger passed a plan that calls for an 80% reduction BELOW 1990 levels by 2050.  Ye-ow!

So what is the silver lining here and what has it got to do with real estate?  Any new regulations would likely credit companies for CO₂ reductions taken ahead of any regulations.  In the CFO Magazine article, Tom Catania VP of Gov't Relations at Whirlpool Corp. says, "If we can get documented emission reductions that go beyond a regulatory standard, we see that as an asset down the road."

The greatest opportunity or "bang for the buck" in CO₂ reductions is in reduced energy consumption.  Powering and air-conditioning office, retail, and warehouse space will be the greatest single impact for many businesses.  Figuring out a way to reduce energy consumption is good for the environment, will reduce your corporate liability, presents a positive corporate image to the community, and can save you significant amounts off of your utility bills to offset any investments in technology.  Sempra Energy publishes a list of ways that businesses can immediately start to save energy here.

Two simple steps are to install occupancy sensors on lighting systems and to program PCs to shut down automatically.  Lighting sensors can save up to 40% (more in warehouses).  Shutting down your PCs after hours and on weekends saves about $80 each annually.  A simple free program that my firm uses to power down our PCs is ShutDownPro.  Solar panels are rapidly approaching break-even values when compared to electrical rates.  With federal and state subsidies available in some areas, they often make sense even without factoring the CO₂ reduction savings.  

The challenge for many of my clients is that they don't own their real estate - they lease.  So here are some ideas for corporate tenants:  1.  Seek Green Buildings - there is an absolute explosion of green LEED certified buildings under construction across the U.S.  By occupying and documenting CO₂ reductions in these properties, you'll be gaining a head start on your competitors who may have to play catch up or pay stiff penalties for compliance in the future, and 2. Install Energy Saving Devices - and negotiate the right to remove any such equipment and restore the premises to original condition when you leave.  Solar panels and a transformer to distribute their power will often have a useful life beyond the term of your lease.  So even if you have no plans to install such devices immediately, negotiate these rights into all new leases.

According to Dan Anderson, professor of Risk Management and Insurance at the University of Wisconsin, "Greenhouse gas emissions will be one of the critical business risks of the 21st Century."  Lower your risk.  Be proactive.  You'll be a responsible corporate friend of the environment.  You may gain an advantage on your competition.  You'll spend less on energy.  And when it comes to CO₂ emissions and energy costs, of course, less is more.