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Survey of public, ‘green’ homebuilders cites KB, Pulte and laggards

Source: Calvert Asset Management, Bethesda, Md.; CP staff

An audit of policies or practices tied to timber-derived building materials and products—plus energy, water, climate change and land use—shows the top 10 publicly traded homebuilding companies addressing environment and resource conservation challenges to widely varying degree. In "A Green Recovery for America's Homebuilders? A Survey of Sustainable Practices by the Homebuilding Industry," activist investor Calvert cites KB Home, Los Angeles, and Pulte Homes, Bloomfield Hills, Mich., tops in covering the five points, each builder maintaining spots from a similar 2008 survey.

"A Green Recovery" ranks builders on a 42-point scale, with KB and Pulte finishing at just below 70 percent and 40 percent, respectively, and the remaining field below 20 percent. "While all 10 homebuilders have made some effort to develop environmental policies or practices, or to offer environmental products, there is strong differentiation in the level of commitment to sustainability and the penetration of 'green' homes in each company's product mix," 2010 survey authors contend. Without the leaders, they add, "The overall analytical performance of the industry would have been far worse, scoring an average of less than 6 percent against key green data points."

Estimated at $36 billion–$49 billion and pacing a two-fold gain from 2009-2013, the green building market represents what Calvert analysts note is a major opportunity for homebuilders. Homes account for about 21 percent of U.S. energy-related carbon dioxide (CO2) emissions, the analysts add, a figure placing considerable responsibility on builders to manage their contribution to climate change by addressing energy efficiency. Companies wishing to remain residential construction market leaders must embrace green building as a core strategy, notes Calvert Director of Shareholder Advocacy Stu Dalheim.

"Two years ago the industry had not yet begun to embrace sustainability as a core part of building design and construction," affirms "Green Recovery" co-author and Calvert Sustainability Analyst Rebecca Henson. "Companies today have taken many meaningful steps toward developing greener and cleaner homes. Much of this progress maybe attributable to recognition of the environmental, societal, and economic benefits of green building, as well as the critical roles that engaged stakeholders have diligently played over the past decade."

Among findings of the report, posted at www.calvert.com: a) builders are most active in energy efficiency and conservation, as all survey targets have a policy or program to curb homes' energy use; b)companies pay more attention to sustainability issues that can offer nearer-term financial benefits to operating costs and customers, such as building material recycling and energy and water efficiency measures; c) climate change may cause vulnerability to the homebuilding industry due to uncertainty of raw materials supply and land development characteristics; and, d) the industry must address timber use, as forests play a crucial role in climate change cause and mitigation.