While past studies have shown that companies can add to their bottom line by being environmentally conscious, recent evidence suggests that building green also provides technical, aesthetic and financial advantages.

It’s not just the environmental elect who are heeding the good news about green building. The movement is spreading across the country among a broad cross section of converts including universities, municipalities and corporations.

What is a green building? According to the Green Building Alliance, a green building is one in which “design and construction practices significantly reduce or eliminate the negative impact of buildings on the environment and occupants” in five areas:

• Sustainable site planning: Selection of infill locations or properties near mass transit, protection of the existing ecosystem and natural features.


• Water efficiency: Use of on-site purification facilities, capture of rainwater or graywater for irrigation and toilets and the installation of lower-flow fixtures.


• Clean energy: Preference for renewable energy sources like photovoltaics or fuel cells, conservation of energy, use of high-efficiency lighting systems and controls, use of high R-value insulation and daylighting incorporated into building design.


• Conservation of materials and resources: Using recycled and recyclable, non-toxic, locally produced materials in construction, renovation and ongoing maintenance.


• Enhanced indoor environmental qualities: Through increased ventilation, individual controls, automatic sensing and monitoring and strategic deployment of windows.

These factors are being incorporated into offices and classrooms being built by businesses and institutions ranging from Ford Motor Co. and Pittsburgh’s PNC Bank to Oberlin College and the University of California Santa Barbara. These new true believers are banging the drum not only for ecological husbandry of resources, but also for the long-term economic benefits they see for themselves.

Consider Ford’s $2 billion, 20-year redesign of its River Rouge, Mich., truck assembly plant. The new factory will feature a planted “habitat roof” that will capture storm water run-off for a potential savings of millions of dollars. Or take the new Conde-Nast building at Four Times Square in New York City. The 48-story structure, with its state-of-the-art energy conservation, recycling and ventilation systems, is expected to yield 10 percent to 15 percent lower operating costs annually.

Not surprisingly, the economic rewards flowing from green building can benefit not just building owners but also investors who might find opportunities in the substantial array of companies developing sustainable technologies and products.

Buildings are logical targets for improvement, primarily because of the tremendous volume of natural resources they consume. In addition to wood and other materials used in construction, the more than 76 million residential buildings and nearly 5 million commercial buildings in the United States today use one-third of all energy consumed and two-thirds of all electricity, according to the U.S. Department of Energy.

Buildings also have a profound impact on air quality. The DOE estimates that they account for 49 percent of sulfur dioxide emissions, 25 percent of nitrous oxide emissions, 10 percent of particulate emissions and 35 percent of carbon dioxide emissions. In some cases, buildings also produce unhealthful indoor air that can cause illness and lost productivity.

Building green can reduce consumption of natural materials and improve air quality while also providing businesses with several attractive incentives, including:

• Savings in operating costs, mostly from lower energy usage.


• More secure sources of energy derived from on-site generation through photovoltaics or fuel cells. This is particularly critical for companies that require a continuous, high-quality supply of power.


• Healthier indoor environments that improve worker productivity.


• Greater availability of architects trained in sustainable design. [According to Professor Stephen Kellert of Yale University, many architecture students have demanded such training.]


• The trending down of construction and materials costs associated with green building. Like the organic food industry, higher demand by more mainstream customers and increased numbers of vendors has resulted in more supply and somewhat lower prices.

Another factor helping to promote green buildings is the development of green building standards. The U.S. Green Building Council established the Leadership in Environmental and Energy Design program to set voluntary standards and awards certification for new and renovated commercial, institutional and high-rise residential buildings.

The LEED Green Building Rating System rates buildings based on a detailed series of standards. The first building to be rated using the LEED system was the PNC Firstside Center in Pittsburgh, which received a Silver designation in 2001. Since then, the Chesapeake Bay Foundation’s headquarters has become the first building to receive a Platinum designation, meaning it has met the highest standards of the LEED system.

As the green building movement grows, investors will find new and intriguing opportunities to get into the action.

Many companies involved with green building are still privately held, but research by Winslow Management identified 10 publicly traded companies that may be of interest to investors: Advanced Environmental Recycling Technologies, (Nasdaq symbol AERTA), which manufactures composite building materials that can be used as an alternative to wood; Apogee Enterprises (APOG), which designs and develops glass products, systems and services for architectural use and energy efficiency; AstroPower (APWR), which manufactures and markets solar power generation products; CUNO (CUNO), which makes water filtration products; GAIAM (GAIA), a lifestyle company providing products and services to customers who value natural health and renewable energy; Herman Miller Inc. (MLHR), which designs and manufactures interior furnishings made from recycled materials; Interface (IFSIA), which makes floor coverings from recycled materials; Southwall Technologies (SWTX), which makes thin film coatings for energy efficient automotive glass, electronic displays and buildings; Trex Co. (TWP), which makes deck materials and Plug Power (PLUG), which makes electric power generators using proton exchange membrane (PEM) fuel cells.

While their performance has been volatile over the last three quarters, these small-cap companies appear to have excellent growth prospects because of their green products.

Trex, which is traded on the New York Stock Exchange, is among the most intriguing of these companies. Based in Winchester, Va., the firm makes a wood-polymer lumber used to build decks and walkways. The material is manufactured using a proprietary process that combines waste wood fibers and reclaimed polyethylene. While offering the appearance and workability of wood, the “lumber” resists moisture, sunlight and insects to prevent rotting, splintering and cracking.

Trex was selected instead of cedar for the walkways and the protective covering over each turn on the 2002 Winter Olympics bobsled and luge tracks. Installed four years prior to the games, the Trex structures were judged far more durable than the all-wood alternative. Trex has also been used successfully in such diverse climates as the Florida Everglades, the boardwalk along the New Jersey shore and trails at Mount Rushmore.

Company performance has also been impressive. Revenues for the second quarter of 2002 were $45.9 million, up from $27.7 million a year ago. Net income for the period was 39 cents per share, compared with 2 cents per share last year.

These highlighted companies stand to gain as the green building movement flourishes. In many cases, their prospects are bright green.

JACKSON W. ROBINSON is president and portfolio manager of Winslow Management Co., a Boston-based investment management firm specializing in green investing. Winslow Management Co. is a division of Adams, Harkness & Hill, a registered investment advisor.