In May 2007 Citigroup committed $50 billion over ten years in investments and financing to fight climate change. That announcement came on the heels of a similar $20 billion promise from Bank of America, as well as environmental initiatives from nearly every other major financial institution. At the same time, the real estate community is warming up to green buildings as never before. What do these trends mean when it comes to financing a green project?
Until recently, financiers saw green buildings as no different than any other buildings—unless they looked unconventional or depended too much on untried technology, factors that might have flagged them as high risk. Now that risk equation has been turned on its head. “If you own a building today and are not considering sustainability, you’ll have substantial risk of functional obsolescence,” suggests Scott Muldavin, executive director of the Green Building Finance Consortium. Arthur Hodges, the director of corporate communications for Denver-based ProLogis, the largest developer of industrial warehouses in the world, agrees: “If you’re not focused on this you’re going to be at a competitive disadvantage,” he says.
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