Presentation 10Apr2009 to conference "It Pays To Be Nice: Economic Models To Encourage Social & Environmental Responsibility, Center For Socially Responsible Business, Lokey Graduate School of Business, Mills College

1. It Pays to Be Nice
Mills College April 10, 2009
Stephen Bushnell
Senior Director – Emerging Industries

2. It Pays to Be Nice – Insurance and the Environment
Corporate Social Responsibility is not a new concept
Fireman’s Fund founded in 1863 with a social mission to support the fire service
Commitment renewed in 2004 through Heritage Program
Provides equipment, training and community education programs to fire
departments around the country
$20,000,000 in donations by October 2008
Examples
- Alameda County Fire Chiefs Assn – Fire safety house trailer $55,000
- Oakland Ca FD
- CORE public education program $100,000
- Rescue equipment $12,000
- Hazmat equipment $10,000
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3. It Pays to Be Nice – Insurance and the Environment
Allianz, (Fireman’s Fund Parent) Allianz for Good program
MicroInsurance
- Allianz offers microinsurance to communities in emerging economies and
developing countries where people are often most vulnerable to risks such as
natural disasters, illness and disease, and where there is little or no social
security. Microinsurance can help these people to invest in their livelihoods,
respond to unforeseen events and plan for their future.
Environmental Management
- Being one of the largest global financial services
providers, we know that our operations have an impact on
the environment.
Climate Change
- Allianz Climate Solutions
- WWF Partnership
- Climate change Center of Competency
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4. It Pays to Be Nice – Insurance and the Environment
Fireman’s Fund and Green Buildings
In 2006 launched the first insurance coverage for Green Buildings
Certified Green Building Coverage
- Discount
- Broadened coverage to protect investment
- Post-loss provisions
Green Upgrade Coverage
- “Green” a building after loss
- Post-loss provisions
Sustainable practices consulting
- Help customers become greener
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5. It Pays to Be Nice – Insurance and the Environment
What are Green Buildings?
Energy and water efficient
Healthy and occupant friendly
Daylighting
Low carbon footprint
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6. It Pays to Be Nice – Insurance and the Environment
Commercial Green Buildings are “certified” by two organizations. Both
organizations certify buildings based on a set of construction and
operational criteria. Both have four levels of certification.
• USGBC •GBI
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7. It Pays to Be Nice – Insurance and the Environment
Why is the insurance industry interested in Green Buildings?
Profound value proposition; businesses can improve cash flow,
operating income and asset value by going green
Green buildings are moving into mainstream
Green buildings are better risks
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8. It Pays to Be Nice – Insurance and the Environment
Why is the insurance industry interested in Green Buildings?
Property/casualty insurance companies are experts in risk management
Insurance industry has historically taken a leading role in new trends in
technology and safety
Customer demand
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9. It Pays to Be Nice – Insurance and the Environment
Climate change poses tremendous risks to the world, the
environment, the economy and the insurance industry.
Green buildings reduce Greenhouse Gas (GHG)
emissions. Allianz/WWF Climate Change Report addresses
this issue in depth.
Hurricane
Flood
Drought
Wild Fire
Changing weather patterns
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10. It Pays to Be Nice – Insurance and the Environment
Green Buildings are unique: No trade-offs
Environment issues often produce winners and losers
Everyone wins with green buildings
- Profound economic value proposition for building owners
- Documented bottom line and employee satisfaction gains
- Public
- Increased retail sales
- Stronger student performance
- Environmental benefits
- Climate change
- Public utilities
- Economic stimulus
- Companies with real green products
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11. It Pays to Be Nice – Insurance and the Environment
Economic value proposition
Buildings use 40% of US energy, including 70% of US electricity. They
generate 38% of all US CO2 emissions
Green buildings typically use 30% less energy. With alternative power devices
can be close to net zero
Significant energy savings can be realized at no or little cost through proactive
facility management
A 30% reduction in energy use results in a 5% increase in NOI (EPA data)
Studies document
- Higher rents for green space
- Faster lease out and higher occupancy rates
- Satisfied tenants
- Higher resale value
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12. It Pays to Be Nice – Insurance and the Environment
More economic value
When a business reduces energy use by 30% they lower operating costs by
$25,000 for every 50,000 sq ft of office space. (EPA 2001)
Green buildings use sustainable, recycled and healthy (low VOC)
materials
Improved indoor air quality, HVAC systems and daylighting in
buildings results in reduced absenteeism and (perhaps) higher
productivity
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13. It Pays to Be Nice – Insurance and the Environment
Public
“Energy efficiency measures have enabled California households to redirect
expenditures toward other goods and services, creating about 1.5 million FTE
jobs with a total payroll of over $45 billion, driven by well documented energy
savings of $56 billion from 1972 to 2006.”
Dr David Roland-Holst, UC Berkeley, Energy Efficiency, Innovation and Job Creation in California,
October 2008
Retail
Documented sales increases in green space (up to 40% increase
Wal-mart
Schools and test scores
Documented increase in student test scores in green buildings
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14. It Pays to Be Nice – Insurance and the Environment
Environment
Buildings use 13.6% of all potable water (15 trillion gallons a year)
Green techniques can reduce water consumption by 50% or more
Buildings generate 38% of all waste in US
Green buildings with a focus on recycling can reduce waste output by 90%
Buildings use 40% of raw materials globally
Green buildings often use recycled materials
Designed for efficient material use
Cradle to cradle philosophy
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15. It Pays to Be Nice – Insurance and the Environment
Climate Change
Buildings generate 38% of all US CO2 emissions
Energy cost to move water
- 3,200 kilowatt hours to move an acre of water (approximately 326,000
gallons) from Northern California to Southern California, the equivalence of
using 9.8 watt-hours per gallon to move the water.
Alternative energy promise (2030 challenge for net zero)
Green materials – concrete
Social and economic costs of climate change
Utilities
Conservation cheaper than new power plants
Avoid desalinization plants
Cap and Trade or Carbon Tax
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16. It Pays to Be Nice – Insurance and the Environment
Economic Stimulus
Green savings are reinvested
“Energy efficiency measures have enabled California households to redirect
expenditures toward other goods and services, creating about 1.5 million
FTE jobs with a total payroll of over $45 billion, driven by well documented
energy savings of $56 billion from 1972 to 2006.”
Dr David Roland-Holst, UC Berkeley, Energy Efficiency, Innovation and Job Creation in California,
October 2008
Green jobs and venture capital
Obama stimulus plan and budget
- Significant investment in energy efficiency and alternative energy
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17. It Pays to Be Nice – Insurance and the Environment
Real green products
Forward looking business see value in green
- Greenwashing and the FTC
Fireman’s Fund and Allianz recognition
- GELA, EDF and others
- DJ Sustainable index
- Financial success
- Sincere flattery
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18. It Pays to Be Nice – Insurance and the Environment
Opportunities
Green upgrade of existing buildings
Impact of 30% energy reduction in 4.5 million commercial buildings and
160 million households?
Climate change
Economy
Profit
Environment
Personal finances
Impact of water conservation, waste reduction, resource conservation?
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19. It Pays to Be Nice – Insurance and the Environment
Triple Bottom Line ???
Green buildings benefit the bottom line, the occupants of the building
and the environment
People
Profit
Planet
“Cool” from and environmentalists perspective, simplistic and perhaps
naïve from the business point of view
Clear that profit includes people and planet
Single bottom line – people, profit and planet are all included in a
sustainable dynamic
Not only pays to be nice … it is a new imperative
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20. Thank you!
Stephen Bushnell
Product Director
Commercial Business
Fireman’s Fund Insurance Company
Novato, CA
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