Whalesbook
India's success in green buildings is well-recognized, but a significant gap remains. Current assessments mainly look at design standards and certified floor area. They often miss the real operational performance and the broad economic benefits these buildings can offer. This oversight greatly underestimates the true economic value of green buildings, especially in an economy where the workforce is a key asset.
India's current evaluation system is largely based on meeting specific rules at the time of design. This approach does not ensure ongoing energy efficiency, better indoor air quality, or the significant economic benefits from improved occupant productivity. International examples, like those from the UK and US, show the value of post-occupancy evaluations (POEs) – studies done after buildings are occupied. These POEs track operational performance and show that better ventilation, daylight, and comfort in green offices can boost productivity by 3-8% and reduce sick days. In India, where staff costs make up about 80-90% of operating costs, even small productivity increases from a better building environment can lead to large economic gains. Focusing only on certification, instead of proven real-world performance, hides this potential and reduces motivation for long-term operational quality, making it hard for policymakers to understand the national impact of green building efforts.
Globally, the real estate market is undergoing a major change driven by Environmental, Social, and Governance (ESG) principles. Investors are increasingly putting money into properties that meet strict ESG standards, seeing buildings that don't comply as riskier. In India, green-certified commercial buildings already attract higher rents and have lower vacancy rates than conventional ones, showing a clear market trend. Studies indicate that green buildings in India can save 20-30% on operational costs through energy and water efficiency. They can also fetch 7-10% higher rents and potentially greater asset values. The SEBI BRSR reporting rules are pushing Indian real estate toward clearer sustainability targets. However, focusing on design certification rather than verified operational data creates a gap between expected benefits and what buildings actually deliver. International methods, such as regular POEs in UK public buildings, incorporate real performance into management and provide feedback on energy use, occupant satisfaction, and productivity. US experience also shows that continuous monitoring and checks in management processes lead to less energy use and happier occupants.
Relying on design certifications without mandatory, verified performance data after buildings are occupied puts India's green building sector at risk. This system, though widespread, is open to 'greenwashing' – buildings might meet standards but not deliver lasting efficiency or occupant benefits. This lack of clarity poses a valuation risk, making it hard for investors and policymakers to identify truly high-performing properties versus those that just meet requirements. While POEs are more integrated into asset management and rules in other countries, India's system lacks consistent requirements for operational data. This data gap reduces accountability and hinders effective policy changes. Furthermore, missing verifiable performance data can make investors wary, potentially affecting the appeal of green financing options and the overall market value of green buildings. Without this proof, 'green' claims could hide real inefficiencies, leaving buildings vulnerable to becoming less valuable over time as the market increasingly demands proven performance.
To improve how India evaluates green buildings, policies should shift to require mandatory performance disclosure for large commercial and public buildings. Annual reports on energy consumption, water use, and key indoor environment details, along with public comparisons, would allow for fact-based policy changes. Green certifications should include post-occupancy checks, with initial ratings confirmed only after proven operational performance. Modern metering and digital monitoring systems are becoming affordable and are essential for this change. Financial rules and green finance systems need to adapt to acknowledge and reward buildings with verified performance, perhaps through lower-interest loans for proven efficiency, moving beyond just design compliance. As India's economy expands, driven by its people, buildings must be seen not just as energy users but as crucial productivity tools, realizing their full potential for national progress.