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 Editorials | Environmental | May 2008 
Not So Green Building
 David Ehrlich - Cleantech Group
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A new survey gives top homebuilders in the U.S. low ratings for sustainable building design and construction.
More and more builders are offering green options to prospective homeowners, but some of the largest homebuilders in the U.S. are a long way from fully embracing sustainability, according to a new report.
Looking at the country's 13 biggest publicly traded homebuilders, the report said that while many of the companies had strong regional programs for environmental responsibility, the builders offered few of these environmental options nationwide.
The survey was put together by the Bethesda, Md.-based Calvert Group, a socially responsible investment firm, and the Boston College Institute for Responsible Investment.
They looked at four major green indicators: energy use, building material use, water use and land use.
KB Home (NYSE: KBH) of Los Angeles came out on top of the list, but the company may want to hold off on celebrating its win.
"No company is far enough ahead at this point to claim the ultimate leadership," said Stu Dalheim, director of shareholder advocacy at Calvert, in a teleconference.
"Any company in this group could really focus itself and address the challenges of sustainability and serve this market."
According to the report, KB Home and Bloomfield Hills, Mich.-based Pulte Homes (NYSE: PHM), have each built over 15,000 Energy Star rated homes.
Pulte Homes is tied at No. 2 on the survey with Fort Worth, Texas-based D.R. Horton (NYSE: DHI).
Energy Star homes must meet guidelines for energy efficiency set by the U.S. Environmental Protection Agency, and are at least 15 percent more energy efficient than standard homes.
But of the 13 major homebuilders, the report said only six had explicit commitments to environmental sustainability, energy eficiency, water conservation, or responsible land management. And the report said no company had published a comprehensive sustainability report.
"There is still plenty of time for the companies that are lagging now, to make progress," said Dalheim.
But Dalheim said they haven't seen a willingness in the homebuilding industry to innovate.
"The auto sector, for example, seems even more willing than the homebuilding sector, and the auto sector has not been a major innovator."
Dalheim said that with a strong market and homebuilding companies running at full steam, until the recent housing crisis, the builders probably didn't see the need to address the green market, and maybe didn't even have time because they were moving at such a high rate to develop homes.
"And that brings up the point that even in this down market, this difficult time for homebuilders, that it's probably a good time for them to innovate."
A tri-national report released earlier this year called green building the fastest, cheapest and most effective way to reduce greenhouse gas emissions in North America (see What's next in driving green building).
That report, from the U.S., Canada and Mexico's Commission for Environmental Cooperation, said that commercial and residential buildings account for a significant amount of energy consumption in those countries.
In the U.S., buildings are responsible for 40 percent of the primary energy consumption, according to the tri-national report, with buildings in Canada accounting for 30 percent, and Mexican buildings responsible for 20 percent.
David Wood, director of the Boston College Institute for Responsible Investment, said builders may see green building as a niche market that is best taken up by smaller players.
"That may not actually work. But it may have been, I think, say two years ago, one justification for not starting out on green."
The green that the surveyed companies have been showing include the energy efficiency programs in the Western U.S. from KB Home, Pulte Homes and Dallas' Centex (NYSE: CTX).
Centex grabbed the No. 4 spot on the report.
Some other strong regional programs noted by the survey were water conservation programs in the Southwest from KB Home and D.R. Horton.
Green building seems to be gaining more ground in the commercial sector, and Wood said that could be because the U.S. Green Building Council's LEED standards are more easily applicable to commercial buildings.
"Also, some of the reputational benefits that corporations and corporate headquarters see in having a green building have led to some green building purchases."
In addition, Wood pointed out that office buildings are more alike to each other, making that model more replicable.
Dalheim said, "One of the ways that homebuilders can work with the financial industry and regulators is developing things like energy efficient mortgages, which give borrowers the opportunity to finance cost effective energy saving measures as part of a single mortgage." |
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