Homebuilders Getting Greener, But Lacking Sustainability Leader

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OAKLAND, Calif. -- Although all of the largest U.S homebuilders have made some efforts to green their work, none has fully embraced sustainable building as a core business strategy, a recent report found.

"Greener Pastures for America's Homebuilders?" looks at the environmental performance, policies and programs of the 13 largest publicly traded homebuilders in the U.S.

Even though the report ranks the companies and identifies which ones are doing better than others, said Stu Dalheim, director of shareholder advocacy for diversified investment management firm Calvert, they all could be doing more. "No company is far enough ahead to claim ultimate leadership (on sustainability)," he said. "This is a recent phenomenon and the companies are just beginning to disclose their policies"

Calvert teamed up with the Boston College Institute for Responsible Investment to research the report. They looked at how each company approaches energy, building material, water and land use when designing and constructing homes. They also looked for any environmental policies or programs the companies have as well as their overall performance, including the number of Energy Star homes they've built.

The report is aimed at investors and consumers - to help them see what companies are making green efforts - as well as the homebuilders themselves and the residential building industry in general. "Investors still don't have the tools necessary to compare investments in property for their long-term material environmental and social profiles," said David Wood, director of the Institute for Responsible Investment.

K.B. Home of Los Angeles took the top ranking, followed by D.R. Horton of Fort Worth, Texas; Pulte of Bloomfield Hills, Mich.; Centex of Dallas; Lennar of Miami; Ryland of Calabasas, Calif.; Beazer of Atlanta; Meritage of Scottsdale, Ariz.; and Toll Brothers of Horsham, Pa. The last four - K. Hovnanian of Red Bank, NJ; MDC Holdings of Denver, Colo.; Standard Pacific of Irvine, Calif.; and NVR Inc. of Reston, Va. - were labeled as being on the "sustainability bottom rung."

One of the biggest challenges for lower-ranked companies, Dalheim said, is that they are not recognizing the potential for sustainable building and what role they can play in it. "Despite the slump in the overall housing market, the green building industry is seeing annual growth as much as 30 percent," Dalheim said. A survey by the National Association of Home Builders also found homeowners are willing to pay a premium for greener homes. "This is a real and growing issue for homebuyers and investors," he said.

The report also found some of the greatest movement is being made regionally, with most homebuilders crafting strong regional program for environmental responsibility, but not offering the same environmental options nationwide. Twelve of the 13 companies have also set plans to build only Energy Star home in specific markets.

Homebuilders may be slow to fully green their work for many reasons. One point Dalheim mentioned was the previous strong housing market. "With companies running at full steam they probably did not see the need to address this market," he said. Now that there is a housing downturn, it would be a good time for companies to innovate and differentiate from others, he said.

Green building has also been given more attention at the commercial level, Wood said, for a number of reasons: programs like LEED, the benefit being in a green building brings to a company's reputation, green office building is more easily replicated and building owners recoup their investment in efficiency while any efficient measure homebuilders invest in benefits the buyer.

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