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S U S TA I N A B I L I T Y D R I V I N G Y O U R B U S I N E S S T H E 2 0 1 0 S U S TA I N A B L E B U I L D I N G B R O C H U R E


What does sustainability mean in business?

Product Sustainability: Life Cycle Assessments

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Contents

Sustainability in the Building Sector: EPDs

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Case Study: Masdar City

www.zastavki.com

Š PE INTERNATIONAL 2010

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S U S TA I N A B I L I T Y I N B U S I N E S S The triple bottom line - People, Planet, Profit - only recently considered a buzz-word, has already matured into a sound business model for a growing number of corporations worldwide. Today’s construction industry operates in a world of extremes; rapidly expanding economies and populations; diminishing resources; increasing frequency of natural disasters; escalating attention to human influence on climate change and globalization. Governance and legislation have, through taxation (e.g. on energy use) and incentives (e.g. tax rebates), promoted green developments. Increased awareness, as a result of “green” taking center stage in media, has led to more and more business leaders recognizing the benefits of sustainability. Furthermore, the emergence of new reporting guidelines and mechanisms have led to increased pressure on organizations to disclose the impacts of their business activities on the environment.

SOCIO-ENVIRONMENTAL Health and Safety Legislation and Regulation Climate Change Crisis Management

Sustainability now lies at the heart of all major shifts in the construction industry. The benefits of adopting sustainable practices are numerous and sustainability is now seen as a driver for business as illustrated on the cover page of this, the first issue of PE International’s Sustainable Building brochure. A relatively new development in the market has been for businesses to drive the adoption of sustainable practices through their supply chain as part of their own sustainability agendas. This new re-enforcing mechanism, for promoting businesses that have adopted sustainable practices, has evolved organically and predictably and can immensely benefit the quick-movers. A focus of this issue is one such driver: Eco-cities around the world and how they have the potential to ramp up sustainable practices within the construction sector as well as other sectors such as retail, transport and renewables.

SUSTAINABILITY An integrated approach to Environment, Social and Economic impact issues (both internal and external) leads to long term sustainable profit growth

ENVIRONMENTAL

SOCIAL

• • • •

• • • • •

Permit and License Compliance Bio-diversity Management Emissions to Air Water/Chemical use and Discharge

Resource Efficiency Energy Efficiency Global energy issues

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• 70% of Europeans view a company’s commitment to social responsibility when making a purchase • 20% of Europeans would be willing to pay more for products that are environmentally beneficial • 89% of the population born between 1982 and 2000 are extremely likely to switch brands to support a cause and 74% will pay more attention to the messages of companies that are deeply committed to a cause

found that Sustainability is generally applied to:

Respect for the individual Equal opportunity Diversity Outreach programmes Human rights and Labor Laws

• Consistent, profitable growth • Risk Management • Total shareholder return

Some market studies show that:

Different companies valorize sustainability differently. The 2010 McKinsey Global Survey

ECONOMIC ECO-ECONOMY

Sustainable development… …integrates economics, society and ecology in decision making and lawmaking to protect the environment and to promote development.

SOCIO-ECONOMIC

• • • • •

Reputation building – 55% Identify growth opportunities – 39% Cost savings – 53% Risk avoidance – 29% Employee attraction, retention & productivity – 26% • Foster customer loyalty – 29% • Other indirect benefits (e.g. media coverage) – 29%

Employment Training and Development Local Economies and Enterprises Community upliftment Sponsorships

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Life Cycle Assessment (LCA) is the compiling and evaluation of the input and outputs and the potential environmental impacts of a product system during its lifetime. Companies adopt LCA because: • Branded companies demand more environmental information about products they purchase. In a recent study, 2/3rds of companies expected their customers to ask them to reveal their carbon footprint in 2010 • Consumers want to know the environmental footprint of the products they use • Of the potential of capturing cost savings through energy efficiency projects • It allows them to better adapt to evolving regulations by knowing the carbon/water exposure from their value chain • It facilitates sustainable innovation by quantifying improvements in design options

LCAs are used to: • Drive Innovation by pointing to areas ripe for improvement and help model outcomes of competing new ideas • Strengthen customer loyalty and boost sales by improving marketing and sustainability claims • Identify areas for potential cost savings through eco-efficiency • Align corporations internally through a common ground for goal setting • Prepare in advance for regulatory changes by quantifying the implications of future legislations • Improve corporate reputation by demonstrating a deeper commitment to the environment • Reduce risk through awareness of potential liabilities

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P R O D U C T S U S TA I N A B I L I T Y : T H E N E E D F O R L C A In recent years, LCA has received increasing support from the scientific community as well as industries and governments and has become central to all kinds of environmental evaluations of products, product systems and processes. The key advantage of this approach is that it allows for the assessment of each of the stages in a product’s lifecycle; from the mining and preparation of raw materials to the final disposal of the product and everything in between. This helps in identifying the key factors affecting the environmental performance of a product, throughout the value chain, and enables cost effective optimizations with the maximum positive impact on the environmental profile of the product.

Product Life Cycle

Waste and Emissions Energy and resource consumption LCA finds its roots in 1963 and has since been used for a variety of applications including improving product designs and material choices, optimizing energy efficiency, product marketing and corporate branding as well as forming a basis for government policy making. Several efforts have been made to standardize product LCAs and make them more widely accepted. These efforts include the development of ISO standards, development of several sophisticated LCA software tools and a variety

of material databases that are both publicly and privately developed and maintained. An LCA begins with the gathering of production data. These include the raw materials used, energy consumed and the wastes and emissions produced as part of the production process. Raw materials and energy carriers are traced back to resources such as minerals and fuels and their preparation and transport are included in the calculation. In the same manner, the production of semifinished products also needs to be included into the calculation. This results in what is known as a cradle to gate LCA since it includes all the flows associated with the manufacturing of a product until it is ready for distribution. Flows such as carbon dioxide and methane, which are emitted to the environment as a result of the production process, are then grouped into impact categories such as Global Warming Potential using characterization factors that indicate their individual contribution to global warming. These kinds of LCAs provide vital information regarding the potential optimizations that could be made within the production process as well as in the supply chain. The same method is applied to the distribution phase and use phase of a product. Once the product has completed its useful life, it is either disposed of, recycled or reused. Reuse and recycling avoid the manufacturing of new products from virgin resources and are, therefore, environmentally beneficial. But these processes still require energy and typically produce waste as well. These are accounted for in what is known as a cradle to grave LCA. Such LCAs help in making design choices, designing distribution networks, and policy making and truly allow for a comprehensive evaluation of the environmental performance of a product. LCAs include all of the material and energy flows associated with a product and, therefore, naturally form the basis of other evaluations such as Carbon Footprints Water Footprints and energy efficiency studies. Carbon Footprints count the amount of green house gases emitted. Water Footprints report on the water consumption and energy efficiency studies track energy flows throughout a product’s lifecycle.

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Behnisch Architekten

S U S TA I N A B I L I T Y I N T H E B U I L D I N G S E C T O R

Norway United Kingdom

Canada

Germany Poland

Netherlands Spain Italy

USA

Romania Turkey Israel Emirates

Japan

Mexico

Taiwan India Colombia

• Governmental regulations and legislation • Market differentiation and creation of niche markets • Keeping up with competition • Meeting client/market demands

Singapore

Brazil Established GBCs Emerging GBCs Prospective GBCs and associated groups Logos: Rating schemes

South Africa

Australia

European firm leaders indicate four key drivers of regional growth in green:

New Zealand

Business leaders in Europe and the US note that building green can:

Argentina

Organizations dedicated to green building are rapidly expanding to all areas of the globe. The World Green Building Council (World GBC) works to nurture emerging regional GBCs, build trust among them and facilitates the sharing of best practices. There are 20 fully established councils worldwide, the most recent being in Spain, Poland, the Netherlands and Singapore. Another 46 groups are working to establish GBCs within their respective countries. • North American programs including the USGBC, Canada GBC and Mexico GBC have helped provide case-studies to the global marketplace • Central and South America including Brazil, Argentina, Costa Rica and Chile have been ramping up their activities partly due to strong volunteer networks • Australia GBC has a strong presence and has been providing assistance to the New Zealand and South Africa GBCs

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• Asia is seeing rapid GBC proliferation including in Japan, Taiwan, China and India • The Middle East is seeing growth with the UAE and Saudi Arabia GBCs helping to green its incredible volume of building As the rate of green building has increased, so too has the number of building evaluation tools. These include building rating schemes such as BREEAM in the UK, Green Star in Australia, LEED in North America and the DGNB in Germany, among others. Each of these schemes uses varying but similar yardsticks to measure the sustainability of buildings including energy use, water efficiency, materials and resources used, indoor air quality and innovation in design. The central principle behind all the rating schemes is an assessment of quality and sustainability through transparency. Based on the evaluations, a rating such as gold, silver or bronze, as in the DGNB system, is given to the building.

• Reduce operating costs by 8-9% • Increase the value of buildings by more than 7% • Improve the ROI by more than 6% • Increase the occupancy ratio by more than 3% • Increase the rent ratio by 3-5% With an average additional cost of only 5% to a create a green building

Green building practices can have the following advantages: • • • •

30-50% reduction of total energy use 35% reduction of carbon dioxide emission 70% savings on waste output 40% reduction of water use

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Environmental Product Declarations (EPD) provide information on the environmental performance of products with a business to business focus Facts about EPDs: • As of 2010 there are over 400 product EPDs registered in the French INIES system, over 650 in BRE and over 300 EPDs in the German IBU platform • 11 EPD platforms, focusing on the construction sector, exist in Europe alone with such platforms being aggressively replicated all over the world • The UK and France are considering mandatory reporting of environmental impacts for all products sold within their national boundaries

Characteristics of EPDs: • Objective: due to the requirement that scientifically accepted and valid methods are used for life cycle assessment (LCA) • Non-selective and neutral: due to the absence of valuations and predetermined environmental performance levels to be met • Flexible: since the contents of an EPD can be amended as necessary and as required by the company/organization after due external review and verification • Comparable: since the information in the declarations is collected and calculated based on common harmonized calculation rules • Credible: due to the requirements for inspection, review, approval and follow-up by an independent verifier • Continuously updated: through the requirements concerning routines for documentation and follow-up procedures.

E N V I R O N M E N TA L P R O D U C T D E C L A R AT I O N S PROCESS OF EPD CREATION 30% of the global CO2-emissions and 40% of global resource consumption is caused by construction. This sector also has the highest potential for CO2 reductions. However, the key issue is to optimize the environmental performance of buildings using a life cycle approach where the materials and products used in the building are compared and evaluated for best performance at the building level. To enable such comparisons, information about the environmental performance of products must be reliable and available in a consistent manner. Environmental Product Declarations (EPDs) were first introduced to the construction sector to be able to communicate verified and reliable information and to compare the environmental performance of products used in construction. EPDs require a platform that develops and maintains the rules and guidelines for presenting information. This is necessary to ensure comparability, quality and facilitate verification. There are several established EPD platforms including the German IBU, the French INIES and the UK based BRE. Since EPD platforms, at present, are generally national, the rules that define the EPD for a particular product group, known as the Product Category Rules (PCR), are often nation or region specific and require strategic selection based on the market in which that product is intended for sale. There is however a strong push in the market for harmonization between these schemes to allow for inter-operability and wider applicability of the EPD.

Global Warming Recycled Content Resource Depletion Renewable Energy Acidification Summer Smog Eutrophication Health Aspects

Interface Inc.

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Focusing on the construction sector, many of these EPD platforms are intrinsically linked to respective building rating schemes providing the seamless transfer of environmental information of products to the building evaluation with an emblem of trust and reliability. EPDs under the ISO 14025 generally include an ISO 14044 conformant LCA, product characterization and technical qualities, description of how it is produced, should be used and disposed of along with relevant safety information. EPDs thus provide a comprehensive format for presenting the environmental advantages of products and allow for comparison between products in this dimension.

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M A S D A R C I T Y: A C A S E S T U D Y

Established in April 2006, Masdar is a multifaceted company advancing the development, commercialization and deployment of renewable energy solutions and clean technologies. Masdar integrates the full renewable and clean technology lifecycle from research to commercial deployment – with the aim of creating scalable clean energy solutions. Masdar works with global partners and institutions to integrate new research with proven technologies to produce efficient systems and processes that can be replicated globally.

THE PRODUCT SELECTION PROCESS

Identify the need • Develop the Masdar City Specification Matrix • Define the restricted materials list

Gather data • Fill out the Masdar City Code of Conduct: How sustainable are you? • Complete the Sustainable Materials Questionnaire : How sustainable is your product? YOU

“Companies aspiring to be sustainable in their operations need to factor in their supply chain. Masdar recognizes that the carbon footprint of its supply chain is in the control of its suppliers and the products purchased in building and operating the city. This is why they spend time and money to get their suppliers to become more sustainable. Companies that choose to ignore building a sustainable supply chain are missing tremendous opportunities to become more efficient and more sustainable. Not only will they reduce the overall environmental impact in their value chain, but in the process they will also reduce their own operations costs – for example, through reduced materials, improved packaging and reduced transportation. Masdar seeks to get their suppliers to report on their GHG emissions and resource utilization. When tracked over time, this provides them with valuable information on how their suppliers are improving (or not) in their sustainability efforts.” - Richard Reynolds, Department Manager, Supply Chain & Consultancy, Masdar City

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Evaluate and rank • Specification of the material • Notification of Material rank

Suppliers to Masdar City will: • Have a vision and practices that support Masdar City and its goals • Out perform Masdar City’s corporate sustainability requirements • Be developers of innovative, eco-friendly products • Demonstrate the eco-friendliness of their products • Maintain a cost-effective balance with their product’s eco-profile • Show commitment to sustainability and constant improvement

Suppliers will benefit by:

Specify • Enter into Masdar City Sustainable Materials/Products Directory • Material Schedule

• Directly boosting growth and profit • Through an unspoken statement of competitiveness and quality • Through incomparable visibility in the Global Sustainability Market (see page 8 for an overview of eco-cities currently in development around the world) and a bolstered Corporate Look • Being compelled to look “inward“, improve processes and innovate leading to increased medium-term cost savings and productivity

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M A S D A R C I T Y: A C A S E S T U D Y

Eco-Density / Vancouver Treasure Island Sonoma Mountain Village

Ithaca EcoVillage Heart of the City / Berkeley

Hamarby BedZED, Hanham Hall, Goteburg Circle Resort, Royal Seaports Gallions Clonburris Eco-City Hamburg Leicester, St. Davids, Amersfoort Brighton Freiburg Zaragoza Küçükçekmece Mata de Sesimbra

Acrosanti

Istanbul Logroño Montecorvo Urjuan, Energy City XeriTown, MASDAR, Ziggurat

Tianjin, Rizhao Yohohama

Huangbaiyu GIFT City

Incheon, Songdo IBD Dongtan

Auroville Singapore

Hacienda

Loja

Brisbane

Curitiba Porto Alegre Eco-city developments Massive eco-retrofitting Established markets for sustainable products

There are over 30 new eco-cities in development around the world today and over 15 cities with extraordinary plans for eco-retrofitting. Don’t forget that almost all major cities in the world today are looking at sustainability aspects when considering new constructions and developments especially in the education, government, institutional, office and health care sectors. Europe, the US and Australasia already have established sustainability markets with substantial focus on building green. Their building rating schemes have experienced aggressive growth in the number of certifications in recent years and this trend is only expected to increase in the near

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Barangaroo

Sibaya Moreland

Auckland, Waitakere

future. Asia, including China and India, is seen to be the biggest green market in the short to medium term. Apart from renewable energy sources, sustainable materials, better construction practices and innovative technologies that conserve energy and resources are among the top themes in the green building marketplace. Product manufacturers that have a developed sustainability strategy, and can demonstrate the environmental performance of their products, will have a clear advantage over those that do not and this market differentiation, according to experts, will markedly increase within the next five years.

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TA K I N G Y O U F U R T H E R …

An interdisciplinary

professional team

Position yourself as a Sustainable Enterprise – Ensure long term growth

with experts in several sectors

Improve productivity and reduce cost

International staff with 550 years of experience in Industry and over 1000 customers worldwide 20+ years of proven software solutions for Sustainability and LCA

efficiency through experience in over 1000 LCA projects and massive material /process databases

Open yourself to the massive and growing Sustainability market Be assured of value

for your investment

Unmatched cost

All-round sustainability solutions supported by our strategic partners

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Compete effectively with market leaders

Enjoy the support of the Worlds best experts in Sustainability

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About PE INTERNATIONAL PE INTERNATIONAL has been steadily guiding companies all over the world along the sustainability road since 1991. Today, PE INTERNATIONAL is the international market leader in strategic consultancy, software solutions and extensive services in the field of sustainability. Serving market leaders around the world, PE has offices in Stuttgart, Vienna, Copenhagen, Manchester, Istanbul, Johannesburg, Bhilai, Shanghai, Tokyo, Taipei, Perth, Wellington, Boston and Kuala Lumpur. PE INTERNATIONAL provides conscientious companies with cutting-edge tools, in-depth knowledge and an unparalleled spectrum of experience in making both corporate operations and products more sustainable. Applied methods include implementing management systems, developing sustainability indicators, life cycle assessment (LCA), carbon footprint, design for environment (DfE) and environmental product declarations (EPD), technology benchmarking, eco-efficiency analysis and emissions management. PE INTERNATIONAL offers two leading software solutions; the GaBi Software and accompanying databases for product sustainability and the SoFi software for corporate sustainability. Over 1000 companies and institutes worldwide put their trust in PE INTERNATIONAL’s consultancy and software including market and branch leaders such as Alcan, Allianz, Bayer, Daimler, Deutsche Post/DHL, Rockwool, Siemens, Toyota, ThyssenKrupp and Volkswagen.

Published in electronic form by PE INTERNATIONAL GmbH, 2010

Please contact: Neil D’Souza

PE INTERNATIONAL GmbH Hauptstr. 111-113 70771 Leinfelden-Echterdingen Germany

Tel: +49 711 341817 460 Fax: +49 711 341817 25 Email: n.dsouza@pe-international.com

Web: www.pe-international.com

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Sustainable Building 2010