It's about the money...plain and simple!

Written by Brian Hicks
Posted November 16, 2005

Dear Wealth Daily Reader,

On my flight to Atlanta last week, I sat next to an older gentleman who undoubtedly had the gift of gab. He was a retired school teacher from Philadelphia who made it big in the commodities market back in the 1970s. And he wasn't shy about chest pounding either.

So it was no surprise that when I told him about Green Chip Stocks and how I was on my way to a Green Building conference in Atlanta, I was met with a sort of patronizing lecture about how Wall Street works and the dangers of investing in such unstable markets.

These guys crack me up!

They're so busy reliving the old days, they can't see beyond their incompetence of jumping on the bandwagon after all the money had already been made - and now trivialize any industry not found in their 'safe' 401k.

Well, as I've always said in regards to Green Chip Stocks - leave your preconceptions at the door.

Because this ain't about tree-hugging, folks.

This is about money. Plain and simple.

Why else do you think more than 10,000 building professionals attended this year's Green Build Conference in Atlanta? To tour the Coca-Cola museum in their birkenstocks?

Not likely.

The fact is, green building is big business.

And every savvy architect, developer and construction firm, worldwide, wants a piece of the action.

But can you blame them?

Hell, 12.7% of the U.S. G.D.P is in commercial, residential and industrial construction alone.

That's more than $1.2 trillion worth of green building potential!!!

Tapping the trillion-dollar vein

Green building isn't just about an environmental alternative - it's about improving current practices; reducing operation costs and making buildings more energy efficient.

And it's for that reason that some analysts are predicting green building to become the standard for the majority of all new construction projects in the U.S. within the next ten years.

In fact, some of the biggest construction companies in the world have already embraced…and profited handsomely from the green building movement.

For instance, take a look at Turner Construction Company.

Ranking between first and second in major segments of the construction industry, Turner had a construction volume of $6.1 billion in 2003.

Today, two years later, the company has 130 'green' construction projects underway - worth $10 billion!

And McGraw-Hill Construction, which serves more than a million professionals within the $3.4 trillion global construction community, just released one of the most comprehensive research reports on green building to date.

Representatives from McGraw-Hill analyzed this report at the conference on Thursday. There wasn't an empty seat in the room!

Of course, historically, construction firms have been a prime target for environmentalists. And in their defense, there probably isn't a construction company on the planet that would even entertain the notion of green building - unless there was something in it for them.

But while the backbone of this initiative has always been an environmental one - today it is an economic incentive that's providing the catalyst for change.

And it is this change that's going to provide us with profits.

Because I don't care if the company sells lead paint and mercury gumballs to nursery schools - you provide them with 'green' offices, manufacturing facilities and warehouses that save them money and increase productivity…they're doing it.

Just don't call it green!

It's amazing to me that in this day and age, any right-minded capitalist would brush aside progress linked to profits because the word, 'green' is attached to it.

In fact, it's even been suggested to me that I should avoid using the term 'green' altogether. Maybe go with 'high performance building' instead.

What is this - sensitivity training for backward-thinking investors?

Give me a break!

Let's get something clear right now. Green building isn't about planting trees near an industrial complex or having a recycling bin in your office.

It's about slashing operating budgets and increasing profitability.

And that, my friends, is why no competent developer in his right mind can dismiss green building.

So pardon me if I don't change my vernacular in an effort to appease the trend chasers.

You want a piece of a burgeoning billion-dollar a year industry - keep reading.

Because not only am I going to show you why green building is going to become the standard - I'm also going to pinpoint for you the green building companies that stand to make investors a lot of money.

Money Talks!

I could sit here all day, and give you statistic after statistic based on accurate, scientific data that would more than validate the environmental benefits of green building.

And I can assure you - they're massive!

From water conservation to improved indoor air quality to cutting construction and demolition waste by as much as 75 percent - environmentally, the benefits more than justify building green.

But as I've already stated, the green building momentum is not being driven solely by environmental concerns…but rather, by economics.

And it is this economic advantage that has allowed the U.S. Green Building Council to develop a strict set of codes and standards for builders that allow for 'green' certification.

The U.S. Green Building Council is an organization, integral to the development of green building. So before we get into the numbers - let me bring you up to speed on how and why this organization's initiatives are proving crucial to the standardization of green building practices.

Comprised of a coalition of leaders from across the building industry, the U.S. Green Building Council works to promote buildings that are environmentally responsible and profitable.

The council maintains a membership of:
Building Product Manufacturers
Building Owners, Managers, Users and Brokers
Financial and Insurance Firms
Professional Societies and Trade Associations
Design, Architectural, Engineering and Professional Firms
Contractors and Builders
Nonprofit Organizations
Universities, K-12 School Systems and Research Institutes
State, Local and Federal Governments
Building Control Service Contractors and Manufacturers

With the full support of its highly-influential membership - a membership that has grown by 1,000% in the past four years, the U.S. Green Building Council has developed a set of standards that many federal agencies, states and local governments are now incorporating into laws and regulations governing the construction of new public buildings. And more and more are now even offering financial incentives or fast-track permits to private developers who use these standards, known as LEED (Leadership in Energy and Environmental Design).

(LEED certification is based on an independent review by an auditor accredited by the Green Building Council, which ultimately helps maintain the credibility of green building practices while pushing the industry forward under a strict code of uniform standards.)

But here's the million-dollar question for developers…

What's in it for me?

With a minimal up-front investment (usually between zero and two percent) in green design initiatives, buildings in the U.S. yield the kind of numbers developers want to hear.
40 % reduction in office building water use
30% reduction in energy costs and harmful emissions from power generation
50 - 75% of construction and demolition waste diverted from landfills to be recycled
$58 billion per year in lost sick time saved through improved indoor air quality
$180 billion in worker productivity gained annually through improved daylighting.
The fact is, green building investments not only pay for themselves over time (often in energy savings alone), but also lead to increased productivity and a reduction in operations costs throughout the lifecycle of the building.

According to the results of a 2004 study commissioned by the state of California to evaluate 33 LEED-certified buildings, costs ran an average of $4 more per square foot.

However, over a 20-year period, the buildings will generate a savings of $48.87 per square foot!

So for a typical, 75,000-square-foot building, you're looking at a cost savings of more than $3.6 million!!!

Granted, this is just one study.

So join me next week when I'll share with you the data, not from state-funded studies…but from the companies utilizing green building initiatives themselves.

Here's a preview of one company in particular that's being seen by some as the new standard for cost-effective building design.

Category 20-Year Net Present Value
Energy Savings $5.80
Emissions Savings $1.20
Water Savings $0.50
Operations & Maintenance Savings $8.50
Productivity and health value $36.90-55.30
Subtotal $52.90-$71.30
Average extra cost of building green ($ -3.00 - $ -5.00)
Total 20-year net benefit $49.90-66.30

Of course, with these kinds of numbers, you better believe someone, beyond the developers, is making a buck.

And that's where our cut comes in.

There are a number of publicly-traded companies exploiting the green building boom at this very moment. And the investment opportunities are well-diversified.

Solar, water conservation products, raw materials, fuel cells, paints, sealants, carpets, interior finishes, wind turbine systems, low-iron glass, power glass, the list goes on and on.

I'll tell you more about these companies, especially the frontrunners, in next week's Green Chip Review.

Until next time,

Jeff Siegel
Editor, Green Chip Stocks

P.S. - I’ll be sharing my full report on Green Building with Green Chip Review members shortly. If you’d like to get a free copy of this report, click here.