'Green' growth fuels an entire industry
- Program tied to green certification pushes building boom
- Business interests make up 89% of voting membership in Green Building Council
- For complete coverage of the business of going green, visit greeninc.usatoday.com
When Rob Watson was writing the nation's first private standard for environmentally friendly construction in the 1990s, he wanted to require "green" buildings to get recertified after five years to prove they were actually conserving energy and water.
But Watson, an environmentalist and early U.S. Green Building Council member, was rebuffed by council marketers who feared that developers would shun a green standard if they knew they could lose certification down the road.
"People were terrified that we would do something that would scare people away," Watson recalled. "It would on some level be a terrible PR thing if you had to remove a building's (environmental) plaque."
Watson's proposal was rejected, illustrating the building industry's power in shaping the wildly popular green-building standard called LEED, which more than 200 federal, state and local government agencies now require in hope of conserving energy and minimizing environmental damage.
The non-profit council calls itself a "diverse group of builders and environmentalists, corporations and non-profits, teachers and students, lawmakers and citizens."
In practice, the council is a business group dominated by architects, engineers, builders and suppliers that profit as tens of thousands of buildings and homes are built to meet LEED, a point-based rating system that stands for Leadership in Energy and Environmental Design.
Business interests make up 89% of the council's voting membership, according to a USA TODAY analysis of council records, and include 91 Fortune 500 companies such as McDonald's, PepsiCo, DuPont and Alcoa. Eighteen of the board's 20 voting members are officials at for-profit firms. Businesses have given the council tens of millions of dollars the past decade in both membership dues and donations, council records show.
By contrast, the council's board has just one person who works for an environmental advocacy group. Only 100 voting members of the council — about 1% — are environmental non-profits. The board didn't have a public-health specialist until 2010 — 17 years after it formed — though LEED encourages the design of buildings that protect occupants' health.
"You've got the building industry playing a strong role in setting these standards that are then being adopted as law. I don't think many people understand that," said John Wargo, a Yale University environmental health professor.
The building industry's influence over LEED, while raising some concerns, also has propelled LEED's dramatic growth across the U.S. and into 139 countries. LEED has won wide acceptance among people who plan, design and construct buildings as a way to win environmental approval and boost profit. There are 13,500 LEED-certified commercial buildings in the U.S., and another 30,000 have applied for LEED approval.
"There are more businesses engaged in the business/environmental movement than there ever would have been," building council CEO Rick Fedrizzi said. "The whole game has changed because of our inclusiveness."
The council has attracted top building-industry firms. Board Chairwoman Elizabeth Heider is an executive at global construction firm Skanska. Board Secretary Punit Jain works for international architects and engineers Cannon Design. Treasurer Lisa Shpritz is a senior vice president at Bank of America, the nation's second-largest bank.
Council Senior Vice President Scot Horst said responsible growth must consider both the environment and the economy: "Our goal is to have a healthy economy. You can't have a failing economy and pretend that the environment won't suffer."
Watson, now a consultant, doesn't fault the council for its caution. "LEED had to save energy and save water, but it also had to make money," he said. "Our job in the first couple of years was to make friends in the industry with something that was sufficiently aggressive and sufficiently comfortable to do. Once we had some traction, then we could start ratcheting up the standards."
LEED has grown more stringent since its launch in 2000, imposing tougher water- and energy-conservation requirements.
The 'green' building boom
Largely as a result of LEED, green construction has soared from $3 billion in 2005 to $58 billion in 2011 and will reach $122 billion in 2015, according to researcher McGraw-Hill. Green design generates another $4 billion a year for architects and engineers.
The nation's largest green builder, Turner Construction of New York City, helped form the building council in the 1990s and held a board seat for most of the past decade. Turner has earned $16.3 billion in the past decade from LEED-certified projects, said Michael Deane, the company's sustainability chief and a former building council board member.
Some leaders have benefited directly as the council created new LEED standards.
Wisconsin environmental consultant Michael Arny became chairman of a council committee formed in 2001 to create a LEED rating system for existing buildings. His consulting group, the Leonardo Academy, then was hired to help write the standard, receiving $793,000 from 2003 through 2005, according to council tax records. Arny's group is now a leading consultant for property owners seeking certification under the standard that Arny helped write.
"We played a really significant role in helping to create and promote a program that's become very successful," Arny said.
The council has paid current and former board members and their firms at least $3.5 million for work on LEED, council tax records show. The work helped position the council members and their firms as top LEED experts.
Council members have lobbied for LEED and green building at all levels of government. About 30,000 members of 79 council chapters influenced 202 proposed laws in 2011 alone, a council report states. The council itself has spent $3.3 million since 2005 lobbying the federal government and Congress on dozens of measures to promote green building through grants, tax breaks and construction standards, federal records show.
Some profit from their own lobbying.
Maryland LEED expert David Pratt became president of the building council's state chapter in 2006 and was named to three government advisory groups, which helped persuade Maryland, Baltimore and Howard County, Md., to require LEED certification for new public buildings. The new laws boosted Pratt's consulting group and his new business selling LEED software — and made Maryland one of the most popular states for LEED.
"That's how I would say we really kicked up demand. We got involved in helping get a lot of legislation passed, and got business more engaged in the value of doing green-certified buildings," Pratt said.
Kansas City, Mo., architect Bob Berkebile helped start the building council in the 1990s. His firm, BNIM Architects, in 2007 urged officials in tornado-ravaged Greensburg, Kan., to rebuild municipal buildings to the highest LEED standard. The city agreed, and promptly hired BNIM for nearly $1 million.
"An entire cottage industry has sprung up around LEED," said University of California engineering professor Arpad Horvath.
Big business gets on board
Businesses shaped the building council from its start in 1993.
Its three founders were business veterans: David Gottfried, a real estate developer; Michael Italiano, an environmental lawyer; and Fedrizzi, head of environmental marketing at Carrier, the world's largest maker of building heating and cooling systems. Carrier was an early financial supporter and suggested Fedrizzi as council chairman, according to Gottfried's self-published memoirs, Greed to Green.
Watson wrote LEED drafts with a few environmentally minded architects and builders in the 1990s when he was a scientist at the Natural Resources Defense Council (NRDC). He sent them to 150 or so "member companies" for feedback, a process he called vital.
"A green-building standard coming out of NRDC would go absolutely nowhere," Watson said. "You needed the dual credibility of environmentalists and the construction industry."
The council also needed industry money. In his book, Gottfried recalled struggling in the 1990s to enlist members that would support the council. "The big money," he concluded, "lay in bringing in large manufacturers."
Early members included the nation's largest makers of flooring, ceilings, windows, doors, furniture, walls and insulation — Andersen, Armstrong, Herman Miller, Interface, Johns Manville, Milliken & Co., Mohawk and USG Corp. Suppliers now represent 2,000 of the council's 13,000 voting members and include DuPont, Alcoa, Kimberly-Clark, PPG Industries, Steel Dynamics, Owens Corning, 3M, Eaton, Delta Faucet, Kohler, Sloan Valve and Dow Corning.
Early corporate members were eager to tell Watson how their products could fit into LEED and saw it as a way to promote green products they were already making or to conceptualize old products as green.
"There are a lot of people who come into this from purely a marketing perspective and just want to sell more stuff. But it's interesting watching how people who came at it cynically end up believing in the cause," Watson said.
Yet corporate members killed an effort by Gottfried and Italiano in 1994 to push for a "pollution tax" on building materials that generated significant pollutants during manufacturing, according to Gottfried's book. Gottfried supported the idea and recalled thinking, "If we don't take on the hard issues, who would?" He backed down after realizing "we'd lose our manufacturers on the board and they wouldn't help me raise money."
The development of LEED involved tens of thousands of volunteer hours. But "it was by no means a scientific process," the federal National Institute of Standards and Technology (NIST) said in a 2002 report. The reliance on "experts and interested parties" could "potentially lead to an industry favor and watering down of environmental standards," NIST said.
LEED became a checklist of features that promise to minimize a building's harm to the environment and to occupants' health. Buildings that incorporate enough features — or earn enough "points" — get LEED certification.
A 2006 study by Horvath, the California engineering professor, found that a handful of LEED points, such as using renewable energy, provided most of the long-term environmental benefit while more than half of the points he studied were worth little or nothing. "A higher (LEED) rating is not always synonymous with lower impacts," the study said.
LEED's breadth has helped its popularity. When LEED was launched in 2000, it was far more broad than previous green-building efforts, particularly those of the federal government, which focused on energy efficiency. LEED rewards the recycling of construction debris, which is popular with local officials struggling to maintain overflowing landfills. LEED rewards "green" building products that have low emissions of contaminants or are made from recycled content, materials near a construction site or from rapidly renewable materials such as bamboo. Many of the council's first corporate members made such products.
In 2010, the building council launched a program that helps large chain outlets by allowing a property owner to get LEED certification for hundreds of similar buildings based on a single prototype. The "LEED Volume" program cuts design and certification costs substantially and is being used by Bank of America, Best Buy, Citigroup, HSBC, Kohl's, Marriott, McDonald's, PNC, Starbucks, Subway, Target, Verizon Wireless and Wells Fargo. All are council members.
Nearly 200 businesses with a financial stake in LEED have given the council $11 million since 2004 to sponsor the council's annual Greenbuild conference. Two of the biggest donors, Kohler Co. and Sloan Valve Co., have given $870,000 combined. The companies make low-flow faucets, toilets and shower heads, all of which LEED requires.
LEED is periodically revised following recommendations of council committees and a vote of the full membership, but Fedrizzi said paying sponsors have no more influence than any other building council member. "The only way you influence the process at LEED is to join an advisory group and volunteer your expertise," Fedrizzi said.
Charges of favoritism
Business representatives are heavily involved in building council advisory groups that recommend LEED standards, raising concerns about them using LEED to make money.
"I don't think there's any doubt that people on the inside are trying to shape the process to benefit their business," said Timothy Serie, legal counsel for the American Coatings Association, whose members make paints and other products that can earn LEED points.
LEED faced a favoritism accusation almost as soon as it was released. The initial version gave one point for heating-and-cooling systems that protected the ozone layer. A leading manufacturer was Carrier, which employed Fedrizzi through the 1990s — while he was building council chairman — and gave money to help start the council.
A major competitor, Trane, made systems that depleted ozone and thus could not get a LEED point — even though they contributed much less to global warming than Carrier systems, according to a subsequent building council report. Trane President Craig Kissel protested, saying in a blistering letter that LEED "creates the absurd result of requiring building owners to pick a less energy-efficient chiller, to spend more on electricity and to generate more fossil fuel CO2 emissions, all in the name of obtaining 'green building' certification points."
The council created a committee in 2001 to study the issue. In 2005, four years after Trane's protest, the building council began awarding LEED points to heating-and-cooling systems that minimized global warming.
Fedrizzi said he was not involved in writing the LEED point, which focused on ozone-depletion because that was a bigger concern at the time than global warming.
In 2010, the council created a new LEED point for installing equipment that stores energy on site, letting buildings reduce energy use during the day when demand is highest and energy supply sometimes falters.
The council's chairman-elect was Mark MacCracken, CEO of a company that produces such equipment. CALMAC Manufacturing of New Jersey makes "ice storage" machines that store chilled air during night hours for release in the daytime. Numerous companies make ice-storage machines and other equipment that store energy using technologies such as batteries and hot water. CALMAC calls itself "the world leader in the product design and manufacture of thermal energy storage."
In 2011, when MacCracken was board chairman, the council and the Environmental Defense Fund launched a national campaign encouraging commercial buildings to use energy storage and other mechanisms that cut demand during peak hours, such as reducing air conditioning. There is a "huge environmental upside" to reducing daytime energy use because it avoids the need to build new power plants to meet peak demand, building council Vice President Brendan Owens said.
MacCracken said his company has not benefited from the campaign or from the new LEED point, which he had "very little role" in developing. "I clearly had to try to distance myself from the process because of my (board) position," MacCracken said.
Red flags on green safety
Business influence has left weak spots in LEED, notably in the system's attempt to push the use of building materials that avoid certain chemicals and substances, health advocates say.
LEED has gained the most acceptance when it doesn't threaten an entire industry but simply rewards an industry's green practices, such as efficient heating-and-cooling systems, said Bill Walsh, executive director of the Healthy Building Network, which advocates for non-toxic interiors. "But when you get into materials and you start to define green materials, you are starting to gore someone's ox. Nobody wants to be selling a product that is not green," Walsh said.
In 2000, the vinyl industry protested a proposal to award buildings one point for avoiding the use of vinyl, which is found in ceiling tiles, carpet backing, pipes, siding, wall covering, fabric, wiring and furniture. The building industry is a major user of vinyl.
The protest instigated council hearings and studies that lasted nearly seven years, ending with the council dropping the proposed point. The protest hindered the council from addressing other potentially harmful materials used in construction, furniture and flooring, Walsh said, adding that "LEED could be doing a lot more to advance the goal of healthy materials."
A new LEED version that could become mandatory in 2015 would try to address the concern by awarding points for products that use minimal amounts of a wide range of potentially harmful chemicals. The new version also would require lab testing of "green" materials such as paints and flooring.
But it will stop short of requiring that indoor air quality be monitored after a building is certified to determine its actual effect on occupants.
"The absence of interior monitoring just doesn't make any sense," said Wargo, the Yale environmental health expert. A negative air sampling could be damaging for manufacturers who belong to the council, Wargo said. "They certainly do not want to give the impression that their products are hazardous or are made with chemicals that might be hazardous."