New Industry Research Shows Increased Global Green Building Opportunities for US Contractors
A new study by Dodge Data and Analytics, published this February in the “World Green Building Trends 2016 SmartMarket Report,” confirms that green design and construction is accelerating as an important global trend. The report includes survey responses from more than 1,000 respondents in 69 countries but focuses more deeply on 13 key construction economies, including the U.S., Mexico, Brazil, Colombia, South Africa, Saudi Arabia, the UK, Germany, Poland, Singapore, Australia, India and China.
Research shows that the dynamics of green growth vary significantly across regions.
- The number of companies that do more than 60% of their projects green in established economies such as the U.S., UK and Germany is expected to nearly double from current levels by 2018.
- In some of the developing areas—such as Brazil, India, South Africa and Saudi Arabia—high-level green use is forecast to grow by as much as sixfold over that same period, indicating a dramatic and exciting increase in green commitment in regions where much of the world’s new construction will take place.
The research includes responses from all of the key players in the construction industry: design firms, engineers, contractors, consultants and project owners. However, as previous studies on sustainability from Dodge Data & Analytics have demonstrated, contractors are distinct from other players in the U.S. in terms of their green building priorities, triggers and attitudes. The study affords a unique opportunity to better understand how green U.S. contractors compare with contractors outside the country.
- For U.S. contractors interested in capitalizing on their green building expertise in the global marketplace, the report will help them understand which priorities and drivers for green in the U.S. are unique and which are more universally held.
- Also, as global contractors from other markets become more experienced with green building, they may become competitors in the U.S. and other markets.
Overall, these findings provide insight that can help make U.S. contractors more competitive, both domestically and globally.
Currently, contractors in the U.S. far exceed contractors outside the country in their level of involvement with green building. For example, 21% of contractors in the U.S. report that more than 60% of their projects are green, compared with just 10% of contractors outside the U.S. However, the rest of the world is catching up.
- The level of growth in green involvement over the last few years is relatively the same between U.S. contractors and those outside the country, with the percentage of contractors doing more than 60% of all green projects roughly doubling.
- However, while about 50% more U.S. contractors expect to be highly engaged with green by 2018—maintaining a consistent 10 percentage point growth over three years—the percentage of contractors outside of the U.S. who expect to be doing a high level of green building explodes to more than three times the current level.
- The lead that the U.S. contracting market has in global sustainability is thus expected to be eliminated in about three years.
These findings suggest that U.S. contractors interested in capitalizing on their green expertise globally may have a short window to take full advantage of their greater expertise. They can expect global competition for green projects to become more intense in many regions as more local competitors demonstrate increasingly high levels of green experience.
Most of the top triggers that will drive more green building investments by U.S. contractors are the same as those for contractors from outside the U.S. These also correspond with the top drivers reported by all the respondents to the current study—client demand, market demand and environmental regulations.
However, the importance of these top factors differs between U.S. and global contractors. For example:
- Client demand was selected by 67% of U.S. contractors as a top trigger and clearly dominates that market, with only 33% selecting the second most important trigger—market demand.
- On the other hand, 49% of contractors outside the U.S. consider client demand a top trigger, with environmental regulations a relatively close second at 41%.
- Market demands finish third for contractors outside the U.S., selected by 38% of respondents.
Clearly, outside the U.S., market demand and environmental regulations are important triggers, but in the U.S., client demand far exceeds any other factor. The greater importance of market demands outside the U.S. may require companies to show leadership in green building. U.S. contractors may be able to rely on their green expertise in satisfying clients, but to compete outside the U.S. or against offshore competitors here in the U.S., they will need to demonstrate their sustainability commitment in a much broader way to meet market demands.
In addition to the top triggers for increasing green building investments, the study also examined social and environmental drivers.
There is general agreement among U.S. contractors and those outside the U.S. that encouraging sustainable business practices is the top social driver of green building, but that’s where the agreement ends. In the U.S., more weight is also placed on how green building supports the domestic economy, but there is much less emphasis on how sustainability increases worker productivity or creates a sense of community.
These findings are related to a lower level of interest among U.S. contractors in healthier neighborhoods as a trigger for green investment, a factor that was selected by 14% of contractors outside the U.S. but only 5% of U.S. contractors.
This implies that contractors outside the U.S. give greater consideration to the impact of green building on the health and well-being of building occupants than those in the U.S. do. As a result, U.S. contractors may risk being unprepared for the next important factor critical to their sustainably minded clients.
The differences in environmental drivers between U.S. contractors and those outside the U.S. highlight a general trend whereby U.S. firms tend to focus on reducing energy and water consumption but are less concerned with protecting natural resources or lowering greenhouse gas emissions than their global counterparts.
It is possible that the past and current high levels of green activity reported by U.S. contractors relate directly to the fact that 54% of them are members of a green building council, compared with just 19% of contractors outside the U.S. who responded to this study. However, even if green building council membership influences the increased levels of green building activity reported by U.S. contractors compared with global contractors, it is even more telling that growth in green building by contractors outside the U.S. will eliminate that apparent advantage.
Another factor that U.S. contractors have in common with other U.S. players who participated in the survey is that they are far less likely to use metrics to track green building performance than respondents outside of the U.S.. Only 49% of U.S. contractors report using those metrics, compared with 75% of contractors outside the U.S.
There may be a perception in the U.S. that the value of green building, especially when it comes to operating cost savings, is self-evident, so there is less of a perceived need to use metrics. However, this may cause U.S. companies to miss an opportunity to add value for their clients in building green projects.
Despite the low levels of measurement, the quantifiable benefits of green building—such as lower operating costs, increased building value and short payback periods for investing in green buildings as reported by all U.S. companies, including contractors—are quite consistent with the overall global averages.
Currently, U.S. contractors are in a strong position to compete globally in the green building marketplace. However, global competition is increasing rapidly, and U.S. firms may need to consider how to stay competitive. That includes establishing market leadership in green building, a greater emphasis on how they demonstrate to clients that green buildings are healthier buildings and how to use metrics to illustrate the value of their own green projects.