Melaver Inc. has achieved a string of "firsts" in greening the real estate business, including the first LEED-certified all-retail shopping complex in the U.S., but CEO Martin Melaver says truly innovative, sustainable business projects begin at home. In this SLM interview, Martin explains how a single corner grocery became a pioneering - and extremely successful - real estate empire without losing its soul along the way. (To listen to our conversation with Martin, click here.)

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SLM: Melaver Inc. has been in your family for three generations - whose idea was it incorporate sustainability into the company's overall business strategy?

Martin: Wow, that's a tough one to answer. We started out 70 years ago in the grocery business. My grandmother owned a corner store which, like many small family businesses, played a central role in the community. When we sold the business in the mid-80s, we discovered two things: One, that we'd been in the real estate business all along - we just hadn't realized it, and two, that we didn't like the real estate business all that much. The industry is really focused on homogenization of place - strip developments, etc. So from the get-go of the latest iteration of the business there were long discussions among the family members based on the idea that if we were going to stay in the real estate business, we were going to have to do it differently. I'd say it was a collective family effort initially and conceptually, starting in the '80s, and it's really been a collective effort since then. Our small staff has taken the conceptual piece and figured out how to implement it.

SLM: When your family was debating these ideas of sustainability and giving back to the community, did business opportunity factor into it or was it strictly a moral or ethical issue?

Martin: There's always been a sense in my family that you do the right thing and that that's the role of business. Profitability is really what enables you to do that. Having said that, the family was initially divided into two camps: those who believed we should do conventional real estate and give back to the community on the side, and those who considered the way we do business to be as critical as the end result. So I'd say there was a pretty strong current of skepticism running through the debates as to whether the latter approach would actually work, but in the end we decided that it was the right thing to do and we'll just figure out a way to make it work. And we have.

SLM: Ok, so what's the secret to a successful marriage between sustainability and profitability?

Martin: Funny you should ask. We're currently working on a book, which will be out this fall from McGraw-Hill, about the green bottom line. Each chapter is written by a different member of the team - CFO, COO, head of construction, etc. - and we look at all the costs that we've expended over the past 15 years of this process, from developing a values-centric business proposition and company culture to conducting environmental audits to building our expertise, to some of the projects that we've done, and ending with legal, brokerage, and marketing issues that touch the community at large. It's the first time that we've really assembled 15-plus years' worth of financial data in an effort to show, with almost completely open books, how something like this might look.

And it wasn't easy. It was challenging to get some of those metrics. A lot of the early decisions we made were of the "damn the torpedoes - we're just going to go ahead and do it" variety. So there was some real elbow grease involved in going back through the numbers and analyzing them.

The real confession here is that we as a company hadn't until now calculated the total costs and benefits of our environmentally and socially responsible approach. The good news is, we now have the numbers to back up our claim that it truly works from a business perspective as well.

SLM: Would you like to give us a more concrete idea of how green building has been paying off for you?

Martin: Whatever is occurring in the marketplace for conventional building - say a return of 15% or 20% - doing those same buildings with a green orientation should give you equivalent returns at the very least. That's the first cost analysis. In terms of lifecycle costs, green buildings get better returns over time.

But let's talk about the broader idea of building a company with a sustainable orientation, in which your focus on values, your knowledge of environmental footprints, and your expertise in the green building arena really informs the individual projects you undertake. Over the past 15 years I think we've spent in the neighborhood of $5 million on green initiatives. That's not geothermal or solar or materials and technology. That's our investment in the company becoming more sustainable in its orientation. And there's lost opportunity factored into that number because we're talking about a learning process as opposed to business development. The return on that $5 million over that same period of time is about $11 million in documentable returns. I think that shakes out to about a 30% return on investment.

SLM: Most people think of the environmental side of green building. How does building a greener building contribute on the social front as well?

Martin: I think one of the things we as a society really struggle with is building a sense of community. When you focus building on an urban footprint and not on greenfields, you are locating within the existing fabric of community. So you're reducing greenhouse gas emissions by locating close to public transport, but you're also creating the basis for revitalizing an urban area. Specifically, most of our projects these days are mixed-use, combining commercial and retail with residential, and we try to partner where we can to incorporate pro-community elements. For example, we're currently working on a green affordable-housing project within which we’ve included  a nonprofit health clinic, and we've partnered with a local school to develop more after-school programming in the area. But the bottom line is, even when you focus solely on reducing the environmental footprint of a real estate development, you help seed richer communities almost by accident.

SLM: Of all the projects you've worked on, do you have a favorite?

Martin: It's always the next one! We've done a number of "firsts" out there and each time we do, we wonder what we could have done better. At the moment I'm quite taken with a project we're working on as part of the U.S. Green Building Council's pilot program for neighborhood development. It's the site of the first public housing project in Georgia, dating back to the 1940s and the beginnings of my own family business. We're redeveloping that site as a LEED project, but it's the buy-in from broad stakeholders throughout the community and the city- the circles of engagement beyond our company, from the vendors to the local housing authority to the city of Savannah - that's really got us excited. When we do a new project we're looking at the "legs" - the potential for outreach, education, and advocacy in the larger community. That, in my opinion, is how you're going to effect change.

Hear Martin Melaver speak live at Sustainable Brands ’08!