On the House: Building green improves a little

Posted: January 02, 2011

With a housing market that's been in the tank for five years now, dare I say it?

It's not easy building green.

I'm talking about sustainable construction, with an eye to energy efficiency especially. The National Association of Home Builders is really big on this, but the rank-and-file membership appears unwilling or unable to sign on.

No doubt that's because recent surveys of consumers have shown that though they support the concept and long for lower energy bills, they are generally unwilling to spend more for a new home with green features - even if the expense now offers huge paybacks down the road.

"Show me the money" has become the mantra of these tough economic times.

It doesn't seem any easier even for big builders to be green, since they have to deal with lower revenue and big quarterly losses.

A recent analysis by Calvert Asset Management Co. Inc. of Bethesda, Md., which focuses on "sustainable and responsible investments" for clients, found that the top 10 publicly traded builders have begun improving "practices related to the environment and resources."

Calvert found, however, that out of 42 possible points, the average total score was slightly more than six points, or 15 percent.

Excluding the leaders in the rankings, KB Home of Los Angeles and Pulte Homes of Bloomfield, Mich. - Pulte builds in the Philadelphia area - the overall analytical performance of the building industry in Calvert's study would have been an average of 6 percent.

Toll Bros., the Horsham-based luxury-home builder, showed marked improvement from Calvert's last study in 2008, rising from ninth to fourth place.

NVR of Reston, Va., which builds in this region, rose to eighth from 13th place.

Stu Dalheim, Calvert's director of shareholder advocacy, doesn't think the economy has caused most builders to put sustainability aside.

"With the increasing importance of issues such as energy supply, climate change, and smart growth, investors will need far greater disclosure from home builders in order to understand their capacity to address these major drivers," Dalheim said.

On the other hand, Calvert found that the home-building industry still does not provide the information investors and consumers need.

"We believe that if these companies wish to continue as market leaders in new residential construction, they must not only embrace green building as a core business strategy, but also make information about their sustainability practices publicly available," Dalheim said.

Here's some of what Calvert's 2010 survey found:

Builders are most interested in energy efficiency and conservation. Each had some level of policy or program focused on curbing residential-energy use.

The 10 major builders pay more attention to sustainability issues that offer nearer-term financial benefits to operating costs and customers, such as building materials and recycling and energy-efficiency measures.

Some builders are choosing to disclose risks related to climate change through their annual 10-K filings with the Securities and Exchange Commission. At this point, home builders appear most concerned about the effect of carbon regulation on costs, rather than the direct physical impacts of a changing climate.

Climate change may cause vulnerability to the home-building industry as a result of uncertainty about raw-materials supply and land-development characteristics, among other things.

The industry must address its use of timber because forests are playing a crucial role in both the cause and mitigation of climate change.

The full report is available at http://calvert.com.


"On the House" appears Sundays in The Inquirer. Contact Alan J. Heavens at 215-854-2472, aheavens@phillynews.com or Twitter: @alheavens.

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