Using LEED-certified (Leadership in Energy
and Environmental Design) buildings increases revenue generated by bank
branches even when they offer the same products and services, according
to a new study co-authored by University of Notre Dame management
professors Edward Conlon and Ante Glavas.
Read the study: The Relationship Between Corporate Sustainability and Firm Financial Performance
In their study of 562 PNC branches (93 LEED, 469 non-LEED), “The Relationship between Corporate Sustainability and Firm Financial Performance,” Conlon and Glavas found that PNC employees who work in LEED-certified branches are more productive and engaged in their work.
Although they’re not yet certain if it’s because LEED
buildings are more attractive to visit or because their employees are
more satisfied, and consequently providing better service, Conlon and
Glavas find that sustainability equals a big difference to the bottom
line at LEED bank branches— $461,300 per
employee after controlling for other variables that influence
performance (e.g., consumer net worth, employee demographics, market
demographics, size and age of branch, marketing spend).
The findings support a growing body of research that shows social
responsibility and sustainability don’t have to be sacrificed for the
sake of profitability. In fact, companies increasingly are finding just
the opposite: They can achieve revenue or job growth while maintaining a
high environmental and social impact.
“It’s a significant finding, and it surprised me,” says Conlon,
associate dean and Sorin Society Professor of Management. “We compared
the amount of money deposited at LEED and non-LEED branches, and we found more money has been deposited in the LEED branches. We divided the amount by the branches’ total number of employees to come up with a per-employee dollar amount.”
Most other studies on the business impact of sustainability have been
conducted by companies whose products have ties to environmental
concerns or that have become more sustainable as a reaction to
stakeholder pressure and regulation, the researchers point out. Banks
have no such ties, so whether considering a checking account, savings
account or loan, the bank’s sustainable strategy – or lack thereof –
doesn’t directly affect the product.
Furthermore, PNC’s sustainability
strategy was not reactionary, but rather a voluntary and visionary move
to enhance its reputation, physical banking and working environment, as
well as build pride among employees.
Also, says Conlon, the study uses firm accounting data to determine
financial effects, while most others examine changes in market
valuation. He says PNC was the ideal subject for their research for several reasons.
“PNC has built more than 100 LEED-certified buildings, which is more than any other U.S. company,” Conlon says. “So, PNC is perfect for a LEED
study because they have a lot of them and the branches all do the same
thing — same products, same systems — the only thing that’s different is
the LEED strategy.”
The researchers say the strategy is working, whether it’s because the
buildings look better or the people inside are more fulfilled.
“We think it’s a mix of the two,” Glavas says. “People are certainly proud to be working in LEED buildings.”
“Suffice it to say, I think PNC is getting a payback on its LEED investment,” Conlon says.
Contacts: Edward Conlon, 574-631-9295, firstname.lastname@example.org; Ante Glavas, 574-631-9469, email@example.com