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December 08, 2010
Efforts of US Homebuilders to Address Climate Change are Insufficient
    by Robert Kropp

A report by Calvert finds inadequate disclosure on the environment by homebuilders, but also notes improvements by the industry in adopting energy efficiency measures.

In an update to its 2008 analysis of the green building trends of US-based homebuilders, Calvert found some improvement in "policies and practices relating to the environment and resources, but much progress remains to be achieved." Considering that "homes account for about 21% of US energy-related carbon dioxide (CO2) emissions," the need for homebuilders to recognize their responsibility toward the mitigation of climate change grows increasingly pronounced.

The report, entitled
A Green Recovery for America's Homebuilders? A Survey of Sustainable Practices by the Homebuilding Industry, assesses the environmental and sustainable practices of homebuilders by means of five indicators: land, building materials, energy, water, and climate change. The opportunity for improvements by the industry can be found in the fact that out of a possible 42 points, the average total score was slightly more than six points, or 15%.

In its analysis, Calvert found that "A sizable gap still remains between what investors need and the information that homebuilders provide." In particular, "Homebuilders are not measuring and disclosing their impact on the environment in a comprehensive manner." Only two of the companies analyzed, for instance—Pulte Homes and KB Home—respond to the
Carbon Disclosure Project (CDP), and are the only companies that currently report their levels of greenhouse gas (GHG) emissions.

However, the report also finds that in response to guidance on climate change reporting issued by the Securities and Exchange Commission (SEC) in January, more homebuilders are choosing to disclose climate change-related risks in their annual 10-K filings.

KB Home finished first in Calvert's ranking of homebuilders, followed by Pulte Homes. If, as the study points out, the two top finishers had been excluded from the study, "the overall analytical performance of the industry in our study would have been far worse."

Despite the pronounced need for improvement in sustainable reporting and practices within the industry, Calvert did find areas where improvement over 2008 was noted. Every homebuilder had a policy addressing energy efficiency, and three companies—KB Home, Meritage Homes, and NVR—"have national commitments to build all new homes to
EnergyStar standards," according to Calvert.

A joint program of the US Environmental Protection Agency (EPA) and the US Department of Energy, EnergyStar requires that new homes be at least 15% more energy efficient than homes built to the 2004 International Residential Code (IRC) to receive certification.

"Overall," the report states, "The economic crisis has not thwarted many homebuilders' efforts to become more sustainable companies."

In a
press call announcing the publication of the report, Stu Dalheim, the Director of Shareholder Advocacy at Calvert, said, "Investors will need far greater disclosure from homebuilders in order to understand their capacity to address these major drivers."

Homebuilders "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," Dalheim continued.


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