Choices & Decisions

by Ellen Sinreich on February 26, 2014

For those in the real estate industry who are greening their properties, portfolios and companies, there are difficult decisions to be made when it comes to third-party green certifications.

As the green building movement becomes both broader and more deeply rooted, an increasing number of green ranking systems has materialized to help real estate organizations and their stakeholders — tenants, investors, lenders, and regulators — evaluate their environmental efforts.

Although this proliferation of green ranking systems is a testament to the remarkable transition of sustainability from a fringe movement to a mainstream concern, both the real estate subjects of the ranking systems, and their stakeholders to whom the rankings are directed, are often confused as they navigate the different systems.

How to Determine “What’s the Best Ranking System for Me?”

Here are a few of the things we evaluate when helping our real estate clients select the green ranking systems that make the most sense for their properties and organizations. In future issues of the Green Edge News Alert, we’ll delve more deeply into these systems and show you how they work, the organizations behind them and what they are actually evaluating.

How does the ranking system define sustainability or green? This is one of the most vexing issues for green ranking systems. There are many valid perspectives and there is no one right answer. A building may be “green” enough to earn Leadership in Energy and Environmental Design (LEED) certification, but might not meet the standards of the Living Building Challenge. Or, on the other hand, it may earn an Energy Star certification but not qualify for LEED. How a particular building’s characteristics are evaluated by each ranking system is a reflection of what that ranking system values and may conflict with other equally valid ranking systems and values.

What subject population does the ranking system evaluate well? Not all subject populations were created equal when it comes to different ranking systems. Take retail real estate, for example. The ownership and control structure of most multi-tenant retail properties often results in poor green rankings for these properties when evaluated with some of the more widely used green building rating systems. Thus a retail real estate owner might be well advised to subject its properties to the green evaluation offered by the new Property Efficiency Scorecard developed specifically for retail properties. On the other hand, a new green building ranking system, such as the Property Efficiency Scorecard, devised for and by the very industry seeking to be ranked, might be met with some valid skepticism by the stakeholders it is meant to inform, thus diminishing its value.

What information does the ranking system rely on and what methodologies are employed to arrive at its conclusions?  Different ranking systems base their rankings on different information, apply different relative weight to different types of information and may require a variety of third parties to confirm the information that they are evaluating, such as licensed engineers, architects, air quality experts and commissioning agents. It would behoove every real estate owner considering a third-party green ranking for one or more of its properties to understand what information they will be obligated to provide, and how costly, time consuming and difficult it will be to obtain.

Who is actually doing the ranking and maintaining the ranking system? It is important to understand who the certifying body is: are they a government agency, such as the federal Environmental Protection Agency that administers the Energy Star Certification process, or a private, non-regulated entity, such as the Green Building Certification Institute that administers the LEED certification process, or an industry association such as the International Council of Shopping Centers that created the Property Efficiency Scorecard for its retail real estate owners and tenants. Other considerations include the extent to which the administering organization itself has been vetted and what the qualifications are of the people employed by it to make the actual ranking determinations.

Survey and Evaluate the Options

Given the time, money and effort that it takes for a property owner to earn a third-party green rating for its buildings or the organization itself, it is well worth the time and effort to survey and evaluate the third-party green ranking systems that are available in order to make a decision that will serve it, and its stakeholders, well.

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