Background

Businesses and communities around the world are more likely to invest in sustainability if that investment is also financially viable. The primary vehicle for determining financial viability or security is the business case, which valuations provide. Valuations, therefore, cover a large portion of the businesses and activities known to create greenhouse gases.

The professional who evaluates the business case for a financial institution is usually required to follow valuation standards. "Valuers" are accredited and regulated by a number of professional bodies globally, and they apply authorized standards.

Currently, valuation standards do not extensively cover sustainability, although they embody many of the principles. A 2005 international study called "Green Value" concluded:

• There is a link between the market value of a real estate asset, its sustainable features and related performance;
  
  
• Value generated by enhanced productivity resulting from sustainable design is orders of magnitude greater than the value generated through energy savings;
  
  
• Value is poorly and sometimes wrongly captured-business cases too often focus on costs at the expense of value; and
  
  
• Without a business case and independent validation for sustainability, the real estate and financial sectors will remain skeptical.

The impact of these conclusions is that valuation standards need to change if they are to capture sustainable features, and, by changing the mechanism required for financing businesses and property to embed sustainability, will "mainstream" sustainability within viable everyday business.

Changes to standards occur continually and are undertaken with broad input from client, shareholder and stakeholder groups. These help develop standards that cover sectors or industries, as well as valuations for specific purposes. Embedding sustainability within valuation standards will be developed with broad input from observers drawn from all sectors and industries, client groups and participant stakeholders, worldwide.

At the Vancouver Valuation Summit, valuation leaders launched a process to augment valuation standards globally. This intent was captured in a memorandum called the 'Vancouver Valuation Accord'.

“Linking Valuation
and Sustainability”

Vancouver Valuation Accord Signatories:

The Hon. Gordon Campbell,
Premier of British Columbia

Bob Elton, President & Chief Executive Officer, BC Hydro

Brian Fellows, President & COO, Workplace Solutions Inc (WSI)

Chris Corps, Principal, Asset Strategics Ltd.; Past Chair of RICS

Sandy Wiggins, Chair, US Green Building Council

Kevin Hydes, Vice President, Stantec Consulting Ltd.

Jim Amorin, Vice President, Appraisal Institute

George Maurice, Vice President, Appraisal Institute of Canada

Thomas Mueller, President & CEO, Green Building Council

Louis Armstrong, CEO, Royal Institution of Chartered Surveyors

Philip Parnell, Partner, Drivers Jonas

Stephen Williams, Partner, Williams Murdoch

Clemencia Parra, Director, UPAV

Graham Hill, Mayor, Town of View Royal

Peter Clark, The Appraisal Foundation