National homebuilders: Laggards on global warming
It probably won’t surprise anyone who loves walkable communities, but a new report shows that America’s biggest homebuilding firms score pathetically low on sustainable land use practices.
Calvert Asset Management Company, an investment fund based in Bethesda, Maryland, examined how the 10 largest publicly-held homebuilding firms in the US are doing on sustainability. The verdict: Most of them fare poorly.
Of the ten largest such firms, KB Home, based in Los Angeles, has taken the greatest steps toward environmental sustainability. Pulte Homes, based in Bloomfield, Michigan, is second-best. Meritage Homes of Scottsdale, Arizona; Toll Brothers of Horsham, Pennsylvania; and Standard Pacific of Irvine, California, rank lower on “green” performance, but have improved somewhat in the past two years.
As for the rest of the top ten (Lennar of Miami; DR Horton of Fort Worth; NVR of Reston, Virginia; Ryland Group of Calabasas, California; and MDC Holdings of Denver), don't expect much. Despite a global drumbeat about the dangers posed by greenhouse gases and other environmental provocations, DR Horton and Ryland Group actually lost ground on the sustainability front from 2008 to 2010.
“Homebuilders have a long way to go with regard to climate change,” says the Calvert report, titled “A Green Recovery for America’s Homebuilders? A Survey of Sustainable Practices by the Homebuilding Industry” (available here).
Builders have improved since Calvert produced its first report on homebuilders and sustainability in 2008, but not by much. The top score possible on its survey, which looked at land use, building materials, energy, water conservation, and climate change, was 42 “green data points.” The average score the big builders achieved amounted to just over six points — or 15 percent of what was possible. If KB Home and Pulte had not been in the study, the average score would have been less than 6 percent of the potential points.
Stu Dalheim, director of shareholder advocacy for Calvert, issued a stern statement about the disappointing results:
With the increasing importance of issues such as energy supply, climate change, and smart growth, investors will need far greater disclosure from homebuilders in order to understand their capacity to address these major drivers. As with our previous survey, we found that the homebuilding 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 so that stakeholders can better understand, assess, and appreciate the efforts being undertaken.
What the builders focus on
Of the five areas covered in the survey, builders were found to pay the most attention to energy efficiency and conservation. “Every homebuilder reviewed for this analysis had some level of policy or program focused on curbing residential energy use,” Calvert said. “Our analysis shows that KB Home, Meritage Homes, and NVR (through its subsidiaries) have national commitments to build all new homes to EnergyStar standards.”
“The 10 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,” the report continued. “Issues with longer-term benefits, such as climate change, are not well addressed by this industry.”
Some builders are embracing the US Environmental Protection Agency’s WaterSense program, which enables new houses to save an average of 10,000 gallons of water a year, reducing annual utility costs by at least $100.
“The best companies will use water-efficient fixtures and systems as well as water-conscious landscaping, designed to WaterSense or Leadership in Energy and Environmental Design (LEED) standards,” the report noted. “They will also offer the option of water collection and wastewater recycling for some customers.”
Within the building materials category, there are many ways to go beyond the practices of the past. These include waste reduction (through pre-constructed panels and pre-engineered roof trusses) and use of low-VOC paint and low-VOC carpets. KB Home does the best job of choosing building materials responsibly, according to the report.
What the builders ignore
“Climate change is considered to be the most critical environmental challenge of our time,” the report states. EPA has forecast that the global mean temperature will increase by 3 to 7 degrees Fahrenheit during this century.
That is something that homebuilders should care about. An altered, less predictable climate could make the supply of raw materials for building and land development uncertain. Yet the largest builders in the nation are, for the most part, not communicating with the public about this issue, let alone doing all that’s possible to limit climate change.
The authors of Calvert’s report, sustainability analysts Rebecca Schlesinger Henson and Jennifer Green, examined the 10 builders’ websites and policy documents. They found that “seven of the 10 homebuilders did not report any significant information on its climate impact or the risks or opportunities that climate change may pose to the company.”
Pulte Homes and KB Home, unlike the other builders, have responded to the Carbon Disclosure Project — an independent not-for-profit organization (link here) that has assembled the world’s largest database of corporate climate change information. Pulte and KB Home “are the only companies that currently report their levels of greenhouse gas emissions,” Calvert said, noting that both companies are in “early stages of capturing and disclosing this information.”
Blind to land-use consequences
In a phone interview with New Urban Network, Henson and Green talked about one of the weakest areas of the builders’ performance: land use. Builders are well aware that houses consume a lot of energy, especially if they’re not constructed to high standards. According to the Calvert report, “Homes account for about 21 percent of US energy-related carbon dioxide (CO2) emissions.”
But while builders are doing an increasingly good job of reducing energy waste in houses, they largely ignore the impact of the locations, density, and street networks of those dwellings. The national builders frequently build in collector-and-cul-de-sac pods, which make it hard for residents to walk to services and which lengthen each car trip.
The big companies often build at densities too low to support efficient bus or other mass transit — this despite the fact that the transportation sector is America’s second-largest generator of greenhouse gases (behind electrical generating plants). In addition, the builders often choose to develop in locations that are not close to jobs and regional centers.
Standard Pacific, KB Home, Toll Brothers, and Pulte Homes currently have commitments aimed at increasing infill development,” the report notes. But the moves in that direction by the industry as a whole have been inadequate. “Overall, major homebuilders are not taking progressive steps with regard to land use,” the report declares. And the relevant information disclosed by the companies to Calvert and the public “is very limited.”
To figure out how well the companies were doing, Henson and Green analyzed three key areas:
• Policies (formal commitments from the management team to explicit goals).
• Programs (integrated methods for implementing policy commitments).
• Performance (reported data on the companies’ progress toward stated goals).
By the standards of the homebuilding industry, the KB Home website is extraordinarily comprehensive. Posted on it is an annual KB Home Sustainability Report (available here), which shows what is being done to carry out the company’s “My Home. My Earth” environmental initiative. The latest report, covering 2009, runs 38 pages, packed with data on KB Home’s policies and programs and their progress year by year. If the rest of the industry followed in KB Home’s footsteps, the public would be far better informed about how homebuilding relates to caring for the environment.
Greater disclosure is needed
One of the problems that Henson and Green identify is this:
The homebuilding industry has been slow to join the growing trend of corporate America that discloses environmental, social, and governance (ESG) data through comprehensive sustainability reporting. Recent studies indicate that about four-fifths of the largest companies disclose important ESG information through sustainability reports. … At this point, KB Home is the only large U.S. homebuilder to produce a comprehensive sustainability report.
Discussing the issue with New Urban Network, Henson pointed out that “auto makers will talk about the emissions associated with the vehicles they’re producing.” This move toward candor is present “in almost every industry,” she said. “Homebuilders are sort of slow to talk about environmental or social issues.”
In some industries, the candor emerges because of a public outcry. Nike has had to report on its supply chain and human rights because of concern about workers being exploited overseas. Certainly community concerns about homebuilding and its impact have been expressed in many sections of the US, but they have not yet brought a full and effective response.
One goad to action is the Investor Network on Climate Risk (INCR), which supports more than 90 institutional investors (whose assets total more than $9 trillion) by identifying the financial opportunities and risks in climate change and, INCR says, “by tackling the policy and governance issues that impede investor progress toward more sustainable capital markets.”
INCR (link is here) is coordinated by Ceres, which is described as “a coalition of investors and environmental groups working to advance sustainable prosperity.”
Green says that in the United Kingdom, “homebuilding companies appear to be disclosing more about these issues” than is the case with American companies. “Some of their best practices should be brought over here,” she says.
Without a doubt, the report from Calvert, a company with about $14.7 billion in assets under management, will be a help. Our national homebuilders need to do a better job, for the well-being not only of investors but also of the public and of the environment on which we all depend.
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Comments
Nope. Not surprising.
I suspect that many homebuilders don't even recognize climate change as legitimate. Moreover, in most communities, the easiest thing to do is still a platted subdivision in the hinterlands. Rarely, does anyone object to that. And few codes provide penalties for adding to the waste of land, energy and infrastructure.
While this article is pretty
While this article is pretty fair, I hope others don't use it to villify large homebuilders too much. It's good to know that investors are pressuring for change and disclosure - that's powerful. However, I'd like to see discussion of how three important factors affect performance in these ratings:
1. The huge overhang of new homes at the moment.
2. The fact that it's still more profitable to build in greenfields, and customers for that are probably on average less likely to be concerned about global warming and other environmental concerns.
3. The fact of changing demographics. If Bruce Katz and Chris Leinberger are both correct, some of the locational problems may already be solving themselves as demand shifts to walkable, core-city infill.
There is no scientific concensus on "climate change"
Actually, you don't have to go to homebuilders to see it, regular readers do not believe that there is scientific concensus on climate change. One does not have to be a "fan" of climate change to support energy efficiency for buildings, walkable communities, mixed-use areas, effective land use, and choices for consumers.
The reason I point this out is that many authors write as though readers agree on this subject, and that is not the case. For me, and the audience I represent, arguments based on "climate change" lack credibility.
It's really getting hotter
There is plenty of evidence that the world's climate is changing. The January 13 New York Times, for example, published an article headlined "Figures on Global Climate Show 2010 Tied 2005 as the Hottest Year on Record."
The story was considered so routine that it didn't even win space on the newspaper's front page. Yet here is some of what the story (available here) said:
"New government figures for the global climate show that 2010 was the wettest year in the historical record, and it tied 2005 as the hottest year since record-keeping began in 1880.
"The new figures confirm that 2010 will go down as one of the more remarkable years in the annals of climatology. It featured prodigious snowstorms that broke seasonal records in the United States and Europe; a record-shattering summer heat wave that scorched Russia; strong floods that drove people from their homes in places like Pakistan, Australia, California and Tennessee; a severe die-off of coral reefs; and a continuation in the global trend of a warming climate.
"Two agencies, NASA and the National Oceanic and Atmospheric Administration, reported Wednesday that the global average surface temperature for 2010 had tied the record set in 2005. "
"It was the 34th year running that global temperatures have been above the 20th-century average; the last below-average year was 1976. The new figures show that 9 of the 10 warmest years on record have occurred since the beginning of 2001.
"The earth has been warming in fits and starts for decades, and a large majority of climatologists say that is because humans are releasing heat-trapping gases like carbon dioxide into the atmosphere. The carbon dioxide level has increased about 40 percent since the Industrial Revolution.
“'The climate is continuing to show the influence of greenhouse gases,' said David R. Easterling, a scientist at NOAA’s National Climatic Data Center in Asheville, N.C."
Given how much evidence has already been collected, I don't see how the threats to the world's climate can be denied.
"Global warming" - no concensus
When a person reads well-researched papers like this, from sources like heritage.org, one wonders how “global warming” can continue to be alleged:
How the “Scientific Consensus” on Global Warming Affects American Business—and Consumers - Published on October 26, 2010 by Nicolas Loris - Backgrounder #2479
“Hackers leaked thousands of e-mails and other documents from the University of East Anglia’s Climate Research Unit that detailed how these climatologists, many with important roles in promulgating the official U.N. science, refused to share data, plotted to keep dissenting scientists from being published in leading journals, and discarded original data. Some have resigned and others have been investigated for breaching data laws under the Freedom of Information Act.”
“University of Virginia professor Fred Singer recently published an 800-page report titled, “Climate Change Reconsidered,” which questions and debunks many of the IPCC conclusions and emphasizes that there is no scientific consensus on climate change. [12] Richard Lindzen, professor of meteorology at the Massachusetts Institute of Technology, notes that the IPCC’s models fail to take into account naturally occurring cycles such as El Niño, the Pacific decadal oscillation, or the Atlantic multidecadal oscillation. [13] Other prominent scientists called political action “irresponsible and immoral” because of the lack of credible evidence. [14] When the IPCC released its report in 2007, 400 climate experts disputed the findings; that number has since grown to more than 700 scientists, including several current and former IPCC scientists. [15]”
What we see described is dis-information, and a lack of scientific concensus.
Could Heritage be wrong?
It seems very possible that Heritage has overemphasized one element in the discussion of climate change or has misconstrued what the evidence means. Certainly human activity, including industrial production and consumption of energy for transportation, has grown enormously over the past couple of centuries. It seems reasonable to think that a vast increase in the burning of fossil fuels could affect the world environment and alter the climate.
On Jan. 17, "The Lookout," a blog from Yahoo News, distributed yet another report of the danger of climate change. Among the statements the report contained are these:
"A group of more than 100 scientists and experts say in a new report that California faces the risk of a massive 'superstorm' that could flood a quarter of the state's homes and cause $300 billion to $400 billion in damage. ... The risk is gathering momentum now, scientists say, due to rising temperatures in the atmosphere, which has generally made weather patterns more volatile. ... Federal and state emergency management officials convened a conference about emergency preparations for possible superstorms last week."
The report from "The Lookout" can be found here. The US Geological Survey report on the possibility of a superstorm is available here. Predictions and studies such as these abound.
Does repetition create reality?
Yes - predictions and studies and media articles on the subject of global warming are ubiquitous. However, reporting something does not make it true.
There is actual evidence that more than one group of scientists have been falsifying warming trend data - some people call that lying. And, in point of fact, since scientists do disagee, there is no scientific concensus that there is global warming, that humans contribute to it, or that humans can do something about it.
I will return to my original point: there are regular readers of this publication who find that arguments based on "global warming" lack credibility. Fortunately, urban design offers many topics that are actually interesting.
Insurers say climate is changing
It's not only scientists who are saying the climate is changing. A report in the Feb. 13 New York Times (available here) points out that insurers and engineers are also concerned about climate change and its hazards. According to The Times: "Munich Re, one of the world’s largest insurance companies, says climate-related events serious enough to cause property damage have risen significantly since 1980: extreme floods tripled and extreme windstorms nearly so. ... Statistics show that the frequency of days with heavy precipitation is up in South America, North America and parts of Europe."
The paper also quoted D. Wayne Klotz, president of the American Society of Civil Engineers, as saying: “We could stick our heads in the ground and say nothing is changing. But it is.” Klotz is a water engineer based in Houston. "Engineers design for the biggest flood or highest winds that seem plausible at a given time," The Times observed. "The drainage systems Mr. Klotz builds now are different from those he engineered 20 years ago, because he knows that the Gulf Coast now has much heavier storms."
On Jan. 25, The Times cited other evidence that the world's climate is becoming less stable, writing that "while people in Atlanta learn to shovel snow, the weather 2,000 miles to the north has been freakishly warm the past two winters. Throughout northeastern Canada and Greenland, temperatures in December ran as much as 15 to 20 degrees Fahrenheit above normal. Bays and lakes have been slow to freeze; ice fishing, hunting and trade routes have been disrupted."
The article, available here, also says: "Since satellites began tracking it in 1979, the ice on the Arctic Ocean’s surface in the bellwether month of September has declined by more than 30 percent. It is the most striking change in the terrain of the planet in recent decades, and a major question is whether it is starting to have an effect on broad weather patterns."
There's no shortage of signs that the world's climate is being altered.
climate change and building patterns
Certainly no surprise that big builders pay scant attention to their own building patterns. Many of them don't even participate in the process if they can avoid it. They love to buy approved lots. Our land use regulations certainly don't encourage anyone to participate in any meaningful way whatsoever - land use approvals are often political, time consuming, costly and frought with risk and uncertainty.
Climate change has become a difficult issue to stand on and effect change Once you get past the fear of weeping polar bears floating by on little chunks of ice. The consequence of hypocritical messengers twisting the facts just a little too much. People who don't care are hard enough to transform. Most Americans in fact, really don't care because the Ponzi scheme of sprawl pushes the cost on to their kids, which they have been happy to do for decades.
I reccomend the use of force.
poor incentives, lack of public concern
One of the problems with getting home builders to care about the environment is that it is too easy for them to pass off costs onto the consumer. The homeowners end up paying for the additional gas to get around, the higher energy bills due to poor construction quality, and the fertilizer runoff into their water supply from their grassy lawns. According to Douglas Farr, “National studies show that low-density development increases the cost of hard infrastructure, and with it the tax burden, in developed areas by an average of 11 percent.” (Farr, Douglas. Sustainable Urbanism: Urban Design with Nature. Hoboken, New Jersey: Wiley & Sons Inc, 2008. p. 25.)
In addition, there is a lack of land use policies to provide incentives for builders to adopt environmentally friendly practices, while subsidies and incentives to build on low-density greenfields are still abundant. Lastly, the lack of public outcry from both communities and consumers allows homebuilders to ignore environmental issues. Organized opposition to new developments would impose a cost on homebuilders, which would deter certain types of development. Unfortunately, public awareness of sustainable building practices is still low and public outcry is minimal.