The increase in environmental awareness has spurred growth in green building certifications over the past decade. Regulatory pressures and market demand for sustainable practices have also amplified these third-party programs. While the Environmental, Social and Governance (ESG) conscious investor will argue environmental impact as a key reason for the growing importance of green building practices, there are other factors to consider, including:
- Market variation and tenant interest
- Financial competitiveness
- Tax breaks and incentives
- Well-being and productivity
- Investor and stakeholder expectations
To better understand the growing significance, let’s examine the most common green building certifications, how the criteria are defined and which programs offer the best-in-class for the commercial real estate industry.
6 popular green building certifications in the U.S.
While these programs are voluntary in the U.S., there are several standards and green building certifications rising in popularity. Typically, the sustainability criteria include certain aspects of a building’s lifecycle. Here is an overview of the 6 most popular certifications:
LEED (Leadership in Energy and Environmental Design)
Developed by the U.S. Green Building Council (USGBC), LEED is the most widely recognized green building certification throughout the world. Its comprehensive framework rates buildings on sustainability performance across various categories, including energy efficiency, water efficiency, environmental impact factors and more. LEED is responsible for setting standards, while offering certification for many different types of buildings, i.e., schools, hospitals, commercial, residential etc., and awards different levels such as Gold, Silver, Bronze, based on how many points a building construction meets across each category.
BREEAM (Building Research Establishment Environmental Assessment Method)
Originating in the U.K. in 1990, BREEAM is used to evaluate the environmental performance of buildings across several categories, including water and energy efficiency, health and wellbeing, pollution and more. It is also recognized in the U.S., with some limitations, but it’s not as widely adopted as LEED building practices. However, BREEAM USA In-Use was established to evaluate the sustainability of existing commercial buildings in the U.S. market, and it offers a more welcoming and flexible certification pathway for existing assets.
WELL Building Standard
Developed by the International WELL Building Institute (IWBI), it is widely recognized and growing in the U.S. The WELL Building standard focuses on how buildings affect the health and well-being of the people interacting inside these spaces, by assessing 10 key factors:
- Air
- Water
- Nourishment
- Light
- Movement
- Thermal comfort
- Sound
- Materials
- Mind
- Community
Similar to LEED certification, buildings can achieve different levels of WELL certification based on how a building best meets the criteria.
Green Globes
Administered by the Green Building Initiative (GBI), Green Globes is a green building certification program used primarily in the U.S. and Canada. It is recognized as an alternative to LEED and provides independent, third-party assessment of building sustainability performance. The U.S. General Services Administration (GSA) includes Green Globes as one of the acceptable systems for federal buildings and it is used by private and public sector organizations seeking green building credentials. Green Globes certification is accepted in many states and by local green building programs.
ENERGY STAR
Developed by the US Environmental Protection Agency, (EPA) is a voluntary program that identifies energy-efficient buildings and products. Its primary goal is to reduce greenhouse gas emissions and other pollutants caused by inefficient energy use, while also helping consumers and businesses save money on energy bills. ENERGY STAR covers a wide range of commercial buildings including:
- Offices
- Schools
- Retail
- Hospitals
- Hotels
- Supermarkets
- Warehouses
- Churches (and more)
ENERGY STAR Portfolio Manager is a free online tool from the EPA that allows building owners to grade and measure energy and water usage. The benefits for commercial buildings are far-reaching, with the potential for tax incentives, rebates, and other recognition programs. ENERGY STAR is also known for improving occupancy rates and tenant satisfaction.
National Green Building Standard
The National Green Building Standard (NGBS) is a residential-only certification that certifies sustainable single-family homes, multifamily properties, and mixed-use buildings. Developed by the International Code Council (ICC) and the National Association of Home Builders (NAHB), and approved by the American National Standards Institute (ANSI). It is widely used by developers and builders throughout the U.S. The third-party certifications also certify projects on four different levels (Emerald being the highest) and cover multiple sustainability areas.
Landmark Title’s team of commercial real estate experts has witnessed many changes in green building practices over the last few decades. Sustainability is no longer merely a buzzword; it has become a standard practice in the construction industry.
If you are a builder, developer or investor looking to purchase land or close on a construction loan, our team of escrow and title officers understands the challenges and will provide solutions to ensure a smooth closing for all parties involved in the process. If you would like to learn more about Landmark Title Assurance Agency and its commercial team and services, get in touch here.