U.S. Homebuilders Get Bad Report Card on Sustainability

May 13, 2008

U.S. homebuilders have done little to embrace sustainable building and construction, according to a new survey from Calvert Group, a socially responsible investment firm, and the Boston College Institute for Responsible Investment.

The survey looked at the thirteen largest publicly traded homebuilders in the U.S., focusing on their building practices and the environmental options each homebuilder offers home owners. KB Home, a Los Angeles-based builder, received the highest rankings on the survey, but that may not be an award worth applauding: according to Stu Dalheim, Calvert’s director of shareholder advocacy, “No company is far enough ahead at this point to claim the ultimate leadership… Any company in this group could really focus itself and address the challenges of sustainability and serve this market.”

From best to worst, the builders are ranked as follows:
K.B. Homes (Los Angeles, California)
D.R. Horton (Fort Worth, Texas) and Pulte (Bloomfield Hills, Michigan)
Centex (Dallas, Texas)
Lennar (Miami, Florida)
Ryland (Calabasas, California)
Beazer (Atlanta, Georgia)
Meritage (Scottsdale, Arizona)
Toll Brothers (Horsham, Pennsylvania)
K. Hovnian (Red Bank, New Jersey)
MDC Holdings (Denver, Colorado) and Standard Pacific (Irvine, California)
NVR Inc. (Reston, Virginia)

The report essentially concludes that, while most homebuilders provide some environmental and energy efficiency programs as options for newer homes, no builder has made an effort to fully implement sustainable designs and construction into their offerings.

Even if prospective home owners want to build a home that is sustainable, there are very few options available, without going to very specialized builders — who can often get away with charging an arm and a leg because sustainability is still seen as a niche market. If even one of the big home builders could get serious about offering efficient homes, the infrastructure these companies already have in place could make sustainability an immediate winner for them financially. Even NVR could compete easily with the small builders that are currently the only guys in the market.

And even beyond the fact that these thirteen homebuilders are well-equipped to compete in the sustainable homes market, if they so choose, it may be an important decision they need to make in the near future for reasons other than expanding their offerings to clients. Many home buyers are in the market for homes with high energy efficiency ratings, along with other environmental options. If a house will be expensive to heat or light, prospective home owners are starting to look for other options — even if they have to go with another homebuilder.

The full report is available as a download on Calvert’s website. If you’re considering investing in a few homebuilders, it’s well worth the read.