Scotsman Guide Offers DOE Opportunity to Present Case for Incorporating Energy into Commercial Mortgage Underwriting

Our very own Cindy Zhu, Fellow in the DOE Building Technologies Office, and Holly Carr, Energy Technology Program Specialist for DOE, contributed an informative and educational bylined article to the June 2017 issue of Scotsman Guide magazine, offering insight into the risks and rewards of energy factors in commercial buildings to an audience of thousands of mortgage originators. 

The article references a 2009 study from McKinsey & Company, a worldwide consulting firm, stating that Americans could save $130 billion annually through more efficient building practices. While many commercial building owners understand this opportunity, the article reveals research is beginning to show that buildings with green certification offer a myriad of additional financial benefits, including higher rental prices, sales prices, and occupancy rates.

However, Zhu and Carr explain that in 2016, the Lawrence Berkeley National Laboratory and the University of California-Berkeley's Haas School of Business found a statistically significant correlation between energy factors - such as energy-use intensity and energy price - and mortgage default risk. The study suggests that volatility of such energy factors, which could occur with poor-facilities management practices, translates into a 10 percent increase in default risk relative to the average level. 

Zhu and Carr describe how a litany of financial benefits can be realized through dedicated facility management to ensure organizations make the most out of their energy efficiency investments.

While further investigation is needed into the connections between a building's energy performance and mortgage risk, the article shows that a building's energy performance can be managed correctly to achieve an organization's sustainability goals and cost-reduction forecasts. 

The full, online version of the article can be read on Scotsman Guide's website.