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Information or Marketing? Lessons from the History of Private-Sector Green Building Labelling

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Sustainable Real Estate

Abstract

What can we learn from a quarter century of voluntary green building labelling? Market competition for certification has evolved two dominant labelling strategies, which we classify and describe as “voluntary environmental building codes” and “measured building performance audits”. The former creates a structured framework to support claims of environmental and human health design intentions while the latter supports claims of environmental performance in operation. Empirical research on green building labelling concludes that while labels are often associated with higher property values, there is a growing literature on the systematic disconnect between design intentions and operational performance outcomes, implying that consumers of labels are either primarily interested in the marketing value of certification or unaware of being misinformed. This chapter calls for an integrated certification process across all phases of building design, construction, and operation in order to align incentives between building designers and occupants.

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Notes

  1. 1.

    For example, should a building owner fail to obtain auditing sign-off, her building remains uncertified, a relatively neutral outcome. On the other hand, should the building have a bad year from a performance perspective, most measured building performance auditing tools will award her building a low grade (say, 0 stars out of 6), conveying a negative, rather than neutral, message of differentiation.

  2. 2.

    In this section, when we say “BREEAM” it more specifically refers to all BREEAM modules except In-Use.

  3. 3.

    1, 2, and 3 Green Star achievements can be formally certified in the operational Green Star Performance scheme.

  4. 4.

    The market for residential voluntary environmental building code certification in Australia is led by NatHERS (Nationwide House Energy Rating Scheme). This is an energy simulation similar to PassivHaus that estimates the energy efficiency of a housing design.

  5. 5.

    The residential homes module offers a choice of certification based either on potential or on measured performance. The method for industrial facilities is very similar to that for commercial buildings, so this discussion also applies to the less popular practice of certifying industrial facilities. By May 2017, United States Environmental Protection Agency (USEPA) had issued just over 30,000 certificates to commercial buildings in 18 years but only 175 to industrial facilities.

  6. 6.

    https://www.energystar.gov/buildings/facility-owners-and-managers/existing-buildings/earn-recognition/energy-star-certification/tips-low [viewed 30 April 2017].

  7. 7.

    Over 85% of energy used in Australian commercial buildings is sourced from electricity, so this difference is trivial from an operational energy-efficiency perspective, though it does allow fuel-switching as a strategy to improve labels.

  8. 8.

    Adjustments in the primary-energy-to-greenhouse-gas-emission conversion factors in the benchmark sample changed in 2008 for some states to reflect updated knowledge of electricity emissions in those states (Mitchell, 2010).

  9. 9.

    According to the New South Wales (NSW) Office of Environment and Heritage (2016), the number of unique Australian buildings certified at least once by the four single attribute NABERS labelling systems are 3017 in NABERS Energy, 1349 in NABERS Water, 93 in NABERS Indoor Environment, and 45 in NABERS Waste.

  10. 10.

    https://www.gresb.com/sites/default/files/2016-GRESB-Health-Module.pdf [viewed 4 July 2017].

  11. 11.

    Prior (1991) discusses how the development of BREEAM 1/90 included consideration of voluntary building design standards associated with improving human health and well-being. Voluntary environmental building codes and multi-attribute measured building performance auditing continue to consider human health design guidelines as a prominent module for points/credits towards a green building label. Data and claims of market saturation for green building labels can be found in NSW Office for Environment and Heritage (2016) and Robinson and McAllister (2015).

  12. 12.

    WELL in capital letters refers to the branding of the certification scheme. It is not an acronym.

  13. 13.

    https://wellonline.wellcertified.com/community/projects [viewed 4 July 2017].

  14. 14.

    http://welllivinglab.com/ [viewed 4 July 2017].

  15. 15.

    Epidemiological studies on the relationship between green building design (or performance) and human health (or business productivity) outcomes are either anecdotal in nature or find it difficult to disentangle the number of exogenous determinants of human health (or business productivity) sufficiently to discuss the marginal effect of building design (Fisk, 2000). Hence, we discuss the much easier to measure effect of green building design on biophysical environmental quality.

  16. 16.

    While there are now thousands of LEED BD+C-certified buildings worldwide, studying early adopters in the context of point-scoring behaviours is most insightful because one expects this cohort to be biased towards maximising environmental outcomes. We use the first 450 buildings because from late 2006 the USGBC stopped releasing scorecards from all projects, creating potential bias in the population of LEED buildings with known point scores. To confirm that Fig. 6.1 is not aberrant from average behaviour today, a random sample of the population of all BD+C certifications with disclosed LEED scorecards up until May 2017 reveals no material change in the pattern.

  17. 17.

    LEED is more suitable for this research because it has a fixed total number of points (credits) available. BREEAM and Green Star, for example, allow designers to remove credits from the total and thus the total number of credits earned is not predictive of the label. Exploratory work from the authors on Green Star Design and Green Star As-Built disclosures in Australia confirms that early users of those labelling systems also skew to the minimum percentage of credits required.

  18. 18.

    Meaning certification activity for the same sample of buildings is not observed at each phase in the building life-cycle. With the near-universal decision to make Green Star Performance certifications anonymous, we cannot construct a sub-sample of histograms that feature the same buildings through their lifecycle. However, we can conclude that, except for an unknown fraction of the design-certified cohort that was never built or has not yet finished construction, each building owner has the opportunity to certify using all three systems.

  19. 19.

    For example, the same recommendation was the central finding of a multi-year research study nearly 20 years ago in the United Kingdom (Bordass et al., 2001).

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Author information

Authors and Affiliations

  1. University of Auckland, Auckland, New Zealand

    Jeremy Gabe

  2. University of Technology Sydney, Sydney, NSW, Australia

    Pernille H. Christensen

Authors
  1. Jeremy Gabe
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  2. Pernille H. Christensen
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Corresponding author

Correspondence to Jeremy Gabe .

Editor information

Editors and Affiliations

  1. David O’Brien Centre for Sustainable Enterprise, John Molson School of Business Concordia University, Montreal, QC, Canada

    Thomas Walker  & Lisa N. Hasan  & 

  2. Yale University, New Haven, CT, USA

    Cary Krosinsky

  3. Brown University, Providence, RI, USA

    Cary Krosinsky

  4. John Molson School of Business Concordia University, Montreal, QC, Canada

    Stéfanie D. Kibsey

Appendix: Summary of Rating Schemes Reviewed

Appendix: Summary of Rating Schemes Reviewed

Scheme name

Managing firm

Labels (lowest to highest)

Location of certified buildings

Building typologies

A. Voluntary environmental building codes

BREEAM New Construction; BREEAM Refurbishment & Fit-out

BRE Global

Pass, Good, Very Good, Excellent, Outstanding

Global

Any

BREEAM Communities

BRE Global

Pass, Good, Very Good, Excellent, Outstanding

Europe and Africa

Masterplanned neighbourhoods

LEED Building Design and Construction

US Green Building Council

Certified, Silver, Gold, Platinum

Global

Any

LEED Interior Design and Construction

US Green Building Council

Certified, Silver, Gold, Platinum

Global

Offices, Retail, Hotel

LEED for Neighborhood Development

US Green Building Council

Certified, Silver, Gold, Platinum

Global

Masterplanned neighbourhoods

Green Star Design; Green Star In-Use

Green Building Council Australia

4, 5, 6 stars

Australia

Any non-residential building

Green Star New Zealand

New Zealand Green Building Council

4, 5, 6 stars

New Zealand

Any non-residential building

Green Star Communities

Green Building Council Australia

4, 5, 6 stars

Australia

Masterplanned neighbourhoods

Homestar

New Zealand Green Building Council

1, 2, 3, 4, 5, 6, 7, 8, 9, 10

New Zealand

Any residential building

PassivHaus

PassivHaus Institut

Classic, Plus, Premium

Global

Residential, Office

NatHERS

Australian Federal Government

1, 2, 3, 4, 5, 6, 7, 8, 9, 10

Australia

Any residential building

Energy Performance Certificate

All EU member state governments

G, F, E, D, C, B, A

Europe

Primarily residential buildings, but some commercial buildings depending on the member state.

B. Measured building performance auditing, single attribute schemes

Energy Star

US Environmental Protection Agency

75 to 100 by integer

USA and Canada

Commercial and Industrial

Display Energy Certificate

UK Government

G, F, E, D, C, B, A

UK

29 types of commercial buildings

NABERS Energy, Water, Indoor Environment, Waste

NSW State Government

0, 1, 1.5, 2, 2.5, 3, 3.5, 4, 4.5, 5, 5.5, 6 stars

Australia

Office, Retail, Hotel

C. Measured building performance auditing, multiple attribute schemes

BREEAM In-Use

BRE Global

Pass, Good, Very Good, Excellent, Outstanding

Global

Any non-residential building

LEED for Building Operations and Maintenance

US Green Building Council

Certified, Silver, Gold, Platinum

Global

Office, Retail, Education, Hotel, Warehouse

Green Star Performance

Green Building Council Australia

0, 1, 2, 3, 4, 5, 6 stars

Australia

Any non-residential building

D. Health and wellness certifications

WELL Building Certification

International WELL Building Institute

Silver, Gold, Platinum

Global

Office, Retail, Education, Multifamily Residential

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Gabe, J., Christensen, P.H. (2019). Information or Marketing? Lessons from the History of Private-Sector Green Building Labelling. In: Walker, T., Krosinsky, C., Hasan, L.N., Kibsey, S.D. (eds) Sustainable Real Estate. Palgrave Studies in Sustainable Business In Association with Future Earth. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-94565-1_6

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