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Top homebuilders have a long way to go toward being green, survey finds

December 7, 2010 |  1:41 pm

KBHome.WillowRanch.Corona

The nation's top publicly traded home builders have a long way to go toward improving their policies and practices related to the environment, according to a study released Tuesday.

The study, by Calvert Investments, a Bethesda, M.D.-based investment group, showed the nation's top 10 builders scored an average of 6 points out a possible 42. The builders were ranked using five major green indicators devised by the survey: land, building materials, energy, water and climate change.

Without the two leading companies, Los Angeles-based KB Home, which ranked No. 1, and Pulte Homes of Bloomfield Hills, Mich., No. 2, the overall performance of the industry would have been far worse, Calvert said.

According to a summary by Calvert, other key findings of the survey include:

* Homebuilders are not measuring and disclosing their impact on the environment in a comprehensive manner. Calvert’s analysis looked for environmental performance data points that homebuilders use to measure and manage their footprint, but nearly all homebuilders had no relevant data.

* Whereas Calvert’s last report showed a preference towards regional policies and programs, homebuilders are now making company-wide, national sustainability commitments that pledge full product participation in energy, water and climate change initiatives. At this point, KB Home is the only large U.S. homebuilder to produce a comprehensive sustainability report.

* Companies are most active in energy efficiency and conservation compared with other environmental issues. Every homebuilder reviewed for this analysis had some level of policy or program focused on curbing residential energy use. 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. Issues with longer-term benefits, such as climate change, are not well addressed by this industry.

* In light of [Securities and Exchange Commission] guidance on climate change in early 2010, some homebuilders are choosing to disclose risks related to climate change through their annual 10-K filings. At this point, homebuilders appear most concerned about the effect of carbon regulation on costs, rather than direct physical impacts of a changing climate.

* Climate change may cause vulnerability to the homebuilding industry due to uncertainty of raw materials supply and land development characteristics, among other impacts.  At the same time, the industry, whose products are responsible for over one-fifth of energy-related greenhouse gasses (GHGs), must prepare for future carbon regulation by the EPA. Finally, the industry must also address its use of timber as forests play a crucial role in both the cause and mitigation of climate change. Homebuilders have a long way to go with regard to climate change. Through our research we determined 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, responders to the Carbon Disclosure Project (CDP), are the only companies that currently report their levels of greenhouse gas emissions, although both companies are at early stages of capturing and disclosing this information.


-- Alejandro Lazo

Photo: A dinning room and kitchen in the KB Home Willow Ranch development in Corona.

(Credit: Bret Hartman / For The Times)

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