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IR/PS CSR Case #07-13

DRAFT IN PROGRESS

Market Transformation:
How the U.S. Green Building Council revolutionized thebuilding industry

By: Eric Engelman

GRADUATE SCHOOL OF INTERNATIONAL RELATIONS AND PACIFIC STUDIESUNIVERSITY OF CALIFORNIA, SAN DIEGO
Prepared for Professor Peter Gourevitch
Edited by Jennifer Cheng, MPIA 2008
Corporate Social Responsibility
Winter 2007

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Table of Contents
I. What problem does the standard address? ..........................................................................2
II. How does the standard solve the problem?.........................................................................4
III. What does the standard cover?..........................................................................................6
IV. How is the standard verified?.............................................................................................6
V. How is the organization governed? ...................................................................................10
VI. How is the standard set?...................................................................................................17
VII. Costs and Benefits of Compliance ..................................................................................20
VIII. Conclusion......................................................................................................................22
IX. Discussion Questions.........................................................................................................22
X. Appendix.............................................................................................................................23

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I. What problem does the standard address?
The construction sector is the single largest industry on the planet and by a variety ofmeasures it is also the most environmentally destructive. In the US alone the building industry
was worth over $1.188 trillion annually1. Worldwide, the industry and the buildings it createsare responsible for 30-40% of all primary energy usage2. The US Energy agency puts buildings
share of domestic energy at 35%, with transportation as the second biggest use at roughly 283.
Further, it is claimed by the United States Green Business council that buildings account for 65%
of electricity consumption, 30% of greenhouse gases, 30% of waste and 30% of natural resource
usage.4
Residential construction is responsible for the largest share of construction in mostcountries5 but business related construction is still a very large piece. Private non-residential use
buildings makes up 27% of US construction spending6 while construction and operation of nonresidential buildings is responsible for 8.7% of all energy consumption in Europe7.
From an environmental perspective “greening” the construction industry offers the single
largest opportunity for conservation. Industry convention has been for construction project bids
to compete overwhelmingly on “first costs”, which only consider costs for actually putting up abuilding and ignore operating expenses. In other words, construction firms competing for a job
are rewarded for using the most inexpensive materials and components that meet building codes
even when this significantly increases building operating costs.

1(March 2007, http://www.reuters.com/article/economicNews/idUSN2737051020070430)(UNEP, 2007)
3%(UNEP, 2007)
4(USGBC.org).
5(UNEP 2007)
6(March 2007 http://www.reuters.com/article/economicNews/idUSN2737051020070430)
7(UNEP 2007)
2

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In the early 1990’s there was a very small but growing number of forward thinking
organizations interested in building more environmentally friendly structures for reasons ranging
from ethical to economic. The problem, as the United States Green Building Council (USGBC)
saw it in the early 1990’s, was that “greenness” or “sustainability” meant something different toeveryone and there was no objective way to measure it. Therefore the industry with perhaps thegreatest potential to reduce environmental impact suffered from market imperfections impeding
its incentives and ability to clean up.

II. How does the standard solve the problem?
Seeing this confusion as a barrier to rapid progress and in order to give construction
decision makers a way to plan, verify and communicate the “greenness” level of new
construction projects, the USGBC was formed in 1993 and launched an effort to create astandards based point-system called Leadership in Environmental and Energy Design (LEED) in
1995 (reconcile with 1999 pilot and 2000 found here:
http://www.usgbc.org/DisplayPage.aspx?CMSPageID=1442). By creating the LEED standard,
the USGBC both increases the incentive for organizations to construct less environmentally
destructive structures and provides a tool for them to do so. The voluntary standard, as created,awards “credits” to new construction projects for utilizing designs, processes, materials andtechnologies that minimize environmental impact and maximize energy efficiency. Achieving
certain point levels qualifies a project for one of four progressively ‘greener’ rating levels: LEED
certified Bronze, Silver and Gold.

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The LEED manual sets out objective technical requirements to qualify for each point.
After the completion of a building project, the design team submits documentary evidence to the
USGBC’s reviewers who determine the number of points to be awarded and bestow a rating.
The LEED system solves the two biggest obstacles to a greener construction industry. First, it
defines, in great detail, specific technical criteria for what exactly constitutes a sustainable orgreen building. Although two different projects can qualify for the same certification level in
different ways, LEED leaves no doubt as to precisely what ‘green’ means and how to achieve it(at least according to the USGBC’s definition). Secondly, the standard enables ‘greenness’ to be
objectively communicated, forecasted, measured, certified and advertised. The certification
process distills thousands of pages of complex documentation that construction and design teams
must submit for certification, into a simple 1 through 69 point score and four level grading
system.
By defining, quantifying, and verifying a buildings environmental impact, LEED helps
empower all actors in the construction process to build greener while simultaneously increasing
their incentives to do so. The most technically ignorant CEO can demand the new corporate
headquarters meet “Gold” level certification and the HVAC systems engineer will understandwhat the requirements are for her area of responsibility. Table 1 outlines the benefits ofquantification and verification services the USGBC provides.

TABLE 1 HERE- Benefits of quantifiability and verifiability by actor

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III. What does the standard cover?
LEED originally focused on environmental impact and energy efficiency for newbuildings. It has since expanded scope to six categories: sustainable site development, watersavings, energy and atmosphere, materials and resources, indoor environmental quality, andinnovation and design. Its reach has also been broadened from strictly new construction to
include major renovations of existing buildings, commercial interiors, neighborhood
developments, homes, schools, and existing building operations and maintenance.
The current LEED new construction standard (version 2.2) includes 69 possible points
with a minimum of 26 points needed for ‘LEED certified’ level and 52 required to obtain
Platinum certification. See Appendix II for a list of LEED New Construction 2.2 points.

IV. How is the standard verified?
The LEED certification process is notoriously bureaucratic.8 The process is composed of aseries of formalized procedures consisting of structured exchanges of written documents andletters, sometimes supplemented by direct email or phone contact. There are no site inspections.
Building project that aspires to achieve LEED certification must register with the USGBC($750?). Membership in USGBC is strongly encouraged as it offers members lower fees and amore streamlined certification process9. Registration gives design teams access to resources
such as the 323 page (source?) resource guide for new construction to help them select andintegrate the desired number of LEED points into the project plans. Each point has specific89Reference “Fixing LEED”
See section ___ for more on membership.

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guidelines and detailed documentation requirements to prove compliance with the credit. During
the design phase, the project team can formally request specific clarification as to whether a plan
meets the criteria of an individual point via a written request called a Credit Interpretation Report(CIR) for a fee of $220. All past CIRs and their resulting interpretations are accessible bymembers or registered project designers on the LEED online system. At the time of writing, the
USGBC website reported that more than 6,400 commercial buildings and 5,900 homes havecompleted registration.10
Only after construction is complete may an application for certification be submitted.
Documentation is sent by mail or online (the proposed LEED 3.0 will be online only - source?).
In written form the application can be more than one thousands pages contained in multiple
binders weighing 20 plus pounds.11 At the time of writing, 824 commercial buildings and 194
homes have completed certification according to the USGBC website.12
The application is reviewed by a “LEED review team” who issues a preliminary rulingwithin 30 (?) days of either accepted, rejected or pending on each credit applied for and chooses
up to 6 points to audit, requiring additional documentation. The design team has 30 days torespond with audit documents and any corrections and/or additional supporting documents.
Final decision as to which credits is granted is made within 3 weeks or a second audit can be
performed if two or more of the audited credits are rejected. Registrants dissatisfied with thereview teams ruling can appeal within 30 days for a fee of $500 per credit being challenged. A
different review team then issues a final ruling on the disputed credit(s) within 30 days of theappeal.
10

http://www.usgbc.org/DisplayPage.aspx?CMSPageID=1442
Reference “Fixing LEED”
12
http://www.usgbc.org/DisplayPage.aspx?CMSPageID=1442
11

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Review teams are often referred to as “independent” in USGBC literature although USGBC staff
was hesitant to respond to inquiries about the nature, qualifications, selection process,compensation, and exact relationship of reviewers to the USGBC.13 According to Dean
DiPiettro, LEED customer service representative, “independent” means that reviewers with aconflict of interest with respect to the project being reviewed are not permitted to carry out thereview.

He reported that reviews are carried out by a combination of in-house reviewers andoutside contractors. DiPiettro explained further that there are roughly a dozen in-housereviewers, they do not specialize in a specific standard, and applications are assigned toreviewers and/or contractors based on availability and work volume. Regarding contact between
the reviewers and project teams submitting the application, DiPiettro said that it is notuncommon for reviewers to contact the project team by email or phone to clarify information in
an application, especially in the second stage “where there is more of a back and forth”; project
teams are reportedly not able to contact reviewers and consultants do not contact project teams.
A former LEED board member explained that LEED very often contracts out its application
review to current and former LEED board members or their firms. This source also indicatedthat the USGBC intends to move in the direction of truly independent third-party verification
system in the future. LEED Steering Committee minutes corroborate this, intended as anefficient way to build up review capacity.14

13

When the USGBC employees I spoke to were asked if the organization had a transparency or conflict of interest
policy (which do exist and are two of the six USGBC guiding principles) they said no. They also denied requests
for the organizations financial information. One representative explained that since the USGBC was not a publiccompany it did not have to share it’s financial information with the public. In fact, 501(c)3 organizations are
required to make their tax returns (IRS form 990) available to the public. This information is readily accessed for all501(c)3 organizations, including the USGBC’s, via a few web sites that collect this data from the IRS (SeeAppendix X for USGBC’s 2005 IRS form 990).
14

Find which minutes.

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In general, criticism of LEED’s certification process is not difficult to find although accusationsof impropriety or mis-application of the standard have not been uncovered. The most common
gripe is that the process is to rigidly bureaucratic and not flexible enough. Review teams have areputation for sticking to the letter of the credit requirements, even when the spirit of the credit isclearly satisfied. It has been pointed out that this inflexibility can distort designer’s incentives
who at times are go further but not be recognized for it.15 For example, one architect explained
his frustration with an elusive credit that is granted in buildings where all non-perimeter work
spaces are given local control of the air conditioning and heating system. The architect was able
to go one step further and entirely eliminate non-perimeter space, but the reviewers ruled that
this did not meet the credit requirement.16 It should be noted that there are a finite number of“Innovation” credits that allow for recognition of novel building features, although there is a
maximum for each standard (four for LEED New Construction 2.2).
The formality and stricture of the LEED certification is in essence a tradeoff in favor ofreliability and fairness over flexibility and validity. By eliminating site inspections and limiting
reviewers ability to stray from the written code, the risk of impropriety is conceivably reduced(thereby increasing public confidence). This is at the expense of under-rating some projects thatare more sustainable but don’t fit the credit exactly. Similarly, the choice to keep the process
document based has its advantages and disadvantages. It forces the standard to focus on overtly“provable” features of the building rather than transient aspect more given to hands-on
monitoring (such as actual energy usage).

15
16

Reference fixing leed and others from fixing leed’s works cited“”

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V. How is the organization governed?
USGBC founders approached their objective of promoting green building from the viewthat the problem was not so much ethical as it was structural. The goal of the USGBC is statedas “market transformation”. In order to insure their organization and its standards achieved
widespread acceptance, support, and buy-in from this enormous and diverse industry, it was
decided that the USGBC needed to be an inclusive forum for multiple stakeholders within thebuilding sector to work together and represent their interests. However of central concern to thefounders and indeed this author is how an organization with a socially responsible agenda can
incorporate industry stakeholders without allowing the organizations principles to becompromised. The USGBC’s attempt to limit this potential can be seen in the membership
structure and conflict of interest, balance, and voting policies.
The council was established as a 501(c)3 membership organization and at the time ofwriting there were 12 defined membership categories (see Table 3) and over 9000 member
organizations (a ten-fold increase since 2000)17. Membership dues scales are defined for eachmember category and relate on a sliding scale to the relevant indicator of affordability for thatorganization type (See Appendix V). Annual dues range from the minimum of $300 for K-12
schools, contractors with under $250,000 in revenue and NGO’s with a budget under $15 million,
up to the $12,500 for the largest category of product manufacturers, with revenues in excess of$10 billion18. Membership revenues collected in 2005 were reported in the USGBC’s IRS form
990 filing19 as $5,172,589. This corresponds to roughly one third of the council’s revenues forthe year and averages out to roughly $1000 per member20.
17

http://www.usgbc.org/DisplayPage.aspx?CMSPageID=1442
http://www.usgbc.org/DisplayPage.aspx?CMSPageID=56&, See Appendix X
19
Required of for 501(c)3 organizations, accessed on http://www.guidestar.org
20
Based on annual revenues of $15,991,587 and authors interpolation of 5,000 members at the time.
18

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Balance across membership categories in committee representation is governed by theby-laws and includes the following rules: (i) each committee must be represented by a member
from at least five categories of membership (ii) no category of membership may have voting
control of the committee, (iii) where multiple views on an issue are central to the work of acommittee, such views must be represented, as practicable, and (iv) committee leaders must
avoid the perception of conflict.
Interestingly, USGBC founders originally defined the membership categories such that
trade associations were not represented, feeling that their unique ability to influence theorganizations would be a threat to USGBC objectives. However an amendment to create an
additional membership category for trade associations was passed in 200521. When USGBC cofounder and current President and CEO Rick Fedrizzi was asked by Healthy Building News
correspondent, Bill Walsh, why he pushed for the inclusion of trade unions after they were
initially barred he responded:“USGBC's core values state a commitment to an open, participatory and rigorous
process. Opening our doors to associations is being true to those core values. Mostly,[allowing associations membership] seemed to me almost like a box that we needed
to check off in order to move forward. One reason we excluded association
membership 12 years ago was because as a new and small organization we wanted
to engage their member companies directly. Now that we have nearly 6,000 of ourown member companies and organizations that dynamic has changed. Many
associations actually play an important role in educating their membership about thegrowing importance of the green building movement and sustainability to their21

http://www.healthybuilding.net/news/fedrizzitrade-092105.html

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individual businesses. Some associations, such as ASLA (3), ASID (4) or IIDA (5),represent a profession, not companies, and have already been working in
partnership with the USGBC.
Over time a perception evolved in some quarters that their exclusion from USGBC
membership preempted a full partnership, even though from our point of view thatwas not the case. It became like a small tear in the fabric of our core values thatsome of our critics were using to distract us from our mission of market
transformation towards sustainability. The federal government is an importantcustomer for us, and they began to question the exclusion as well. These concerns
are now removed.”22

During an interview with a former director of USGBC, a more candid explanation
was offered, reporting that trade associations had put pressure “directly on the whitehouse” which put federal government adoption of LEED by the General Service
Administration in jeopardy if trade association’s were not given a seat at the table.
Although the ‘balance’ policies outlined above are meant to keep a single membershipcategory from having undue influence, the source expressed his fears that tradeassociations would influence future standards by using their “limitless resources” to flood
the USGBC with an unmanageable quantity of biased research in their favor.
Is this case instructive of the council’s willingness to compromise on its ideals in theface of heavy pressure? If so, it does not bode well for the USGBC’s future as this is
likely not the last time entrenched polluting interests threatened by the growth of LEED
will avail of political ties to turn up the heat. Or should one have faith in Mr. Fedrizzi’s
22

ttp://www.healthybuilding.net/news/fedrizzitrade-092105.html

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assertion that “Our organization is now large enough, mature enough and increasingly
improving its operations such that honest dissent can be addressed as we move forward. It's
not in the interest of the vast majority of our members to condone conduct that can beperceived as detrimental to the organization.”
To bring an illustrative example to bear, let us consider a timely case of the council’s
reaction to industry pressure. In 2000, while developing the “LEED for Commercial
Interiors” standard, a credit was proposed to reward projects that did not use PVC
materials due to the materials severely negative environmental and human health impacts.
Challenges were raised from vinyl23 industry groups who claimed that there was noscientific basis for such a credit. The credit was put on hold and USGBC’s Technical
Scientific Advisory Committee (TSACE) established the PVC Task Group in November
2002 to review the evidence offered by “stakeholders and independent sources” and reportto the Steering Committee on the “quality and availability of evidence as a basis for areasoned decision about the inclusion of a PVC-related credit in the LEED rating
system.”24 The TSAC held a public meeting for PVC stakeholders in February of 2004 to
solicit feedback on the Task Group’s proposed methodology. In December 2004 a draft
report of the Task Groups findings were published for public comment and received 562
detailed comments (non-Vinyl industry commentators were very critical). After reportedly
addressing the comments and soliciting further public feedback, the final report was
released in February 2007 and concluded that although PVC is worse than all alternativebuilding materials in most of the environmental and health impact categories (i.e. cancer,
climate change, environmental toxicity) for most applications (flooring, siding, etc.) it is23
24‘Vinyl’ and ‘PVC’ are used interchangeably in this paper.
https://www.usgbc.org/ShowFile.aspx?DocumentID=2379

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not the worst in all categories in all application. The Taskforce recommended that LEED
avoid using a “blunt” incentives that penalizes all uses of PVC when in somecircumstances and categories this could lead to substitution of an even worse material. It
recommends alternatively incentivizing the use of materials that demonstrably outperform
all others in all categories for a specific application. Ultimately, the USGBC’s response to
the Task Group’s report, and the fate of the “no-PVC” credit will rest with the LEED
Steering Committee with any changes put to a membership wide vote (see below).
Supporters of green building have been heavily critical of the Task Groups
findings.25 One major source of contention was the methodology used to quantify andcompare relative environmental impacts: a hybrid of Life Cycle Analysis (LCA) and Risk
Assessment (RA). Critics (source?) point out that LCA is associated with decades oftobacco industry reports and has been widely employed in the “Bush administration efforts
to weaken environmental standards.”26 Risk Assessment is said to value the trade off ofshorter human life spans with other “benefits”. And the unique approach that the Task
Group takes by combining the two to make up for holes in the data is claimed to be worse
than either method separately.27
At issue as well was the reports overwhelming reliance on PVC and chemicalindustry supplied research and data. Finally, the report is said to ignore the precautionary
principal, a core value of the environmental movement. The UN's 1992 Rio Declaration
on Environment and Development stated that the precautionary approach needed to be
widely applied if we were to avoid serious irreversible damage to the earth's living systems.

25

http://www.healthybuilding.net/usgbc/tsac.html
Cite.
27
Cite.
26

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It is also one of six guiding principles28 of the USGBC constitution. The precautionary
principle states that: “When an activity raises threats of harm to the environment or humanhealth, precautionary measures should be taken even if some cause and effect relationships
are not fully established.”29 A read of the LEED Steering committee minutes in the weeks
following the PVC report’s release shows a motion was approved to make more specificreference to the precautionary principal in the PVC Task Group report.30 The Task Group
reports findings are also accused of contradicting a growing consensus of findings by anumber of governments, international treaties and institutions that conclude thatelimination of the use of PVC should be a top priority.31
This case demonstrates a few salient points. First we see that years before tradeassociations were formally extended membership, and regardless of the no-PVC credit’s
ultimate fate, the PVC industry was quite capable of triggering a reconsideration of the
PVC credit that has lasted seven years and counting. In the interim the credit has been
excluded from all standards pending the review process, a de facto injunction. While itwould be beyond the scope of this paper to determine the extent to which the process wasintentionally delayed and influenced by PVC stakeholders ‘flooding’ the Task Group withoverwhelming amounts of research, it’s clear that the incentive and capability to do justthat are quite real, given the nature and openness of the review process coupled with the
Task Group’s commitment to dutifully review all submitted research.
Secondly one can observe that the process was conducted with a very high degree oftransparency and openness. The final report is more than 200 pages long and all data used

28

cite
Cite.
30
http://www.usgbc.org/DisplayPage.aspx?CMSPageID=1637
31
http://www.healthybuilding.net/pvc/tsac/TSAC_CmntF-ADPSR-final.pdf
29

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is posted on the USGBC’s website for public access and comment. In the event that areview such as the PVC Task Group report is unduly influenced by economic interests orpolitical pressure from a specific industry group, USGBC procedures are well set up to atminimum, make this observable. Indeed the harsh criticism the PVC report received
attests to a healthy constituency of green building enthusiasts who would serve as a “firealarm”.
Third, in a review of LEED Steering Committee minutes between February and May
of 2007, the author notes that many public criticisms of the report are addressed by thecommittee either moving to add clarifying language to the PVC report or commissioning
further study.
So what is the upshot of this digression into the PVC case? We see potential for apolluting industry to influence LEED policy, at minimum delaying a credit detrimental totheir interests, at worst, swaying a committees findings through biased research and adeluge of comments. However confidence in LEED is saved by virtue of the transparencyof the process which allows the thousands of LEED-invested followers to push back andmake their voices heard. It will be interesting to see how the case plays out in the coming
months. It seems unlikely at this point that the no-PVC credit will be either reinstated as-isor quietly dropped. A probable outcome is that a more sophisticated and nuanced credit
will result that reduces the environmental impacts which inspired the PVC credit whilemore efficiently spreading the burden to other materials besides PVC on the basis of theirrelative performance for each application. Were the PVC industry not so demonized ingreen building circles, one might be tempted to pronounce such an outcome a win-win.
(Another interesting case is the reaction of the wood industry…)

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The board of directors is set up to include a minimum of one and a maximum of two
directors from each membership category, a representative of each of the USGBC’s eightregional chapters, three appointed “at-large” directors plus three appointed directors who
represent special perspectives, one of which is allocated to home builders. Per the by-laws, theboard of directors has the discretion of putting decisions up to a membership-wide vote, forwhich a ten percent quorum is required (more on standard related voting rules below) .
The council’s conflict of interest policy is of specific interest given that directors andcommittee members are very rarely disinterested parties with regard to the standards being
conceivably, many are chosen to serve because of the interests they represent. The board of
directors is charged with setting the conflict of interest policy per USGBC by-laws. The current
policy32 mandates disclosure of conflicts and abstention from motions and voting that “directly or
predominantly involve the matter of conflict“. However the leader is “encouraged to continue
serving on the committee… offering her unique insights”. The policy also allows for the leader
to make a case in writing to the board if she feels that her vote should be allowed.

VI. How is the standard set?
The LEED standard is intended to transform the building market. It is a standard
designed to be reliable yet under ongoing development as it expands into new product categories
and adapts to changing technology and environments.

32

Approved August 31, 2001.

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The LEED Steering Committee oversees development and delivery of the LEED productline and delegates and overseas all LEED committee activities. LEED committees mainly
consist of “horizontal” and “vertical” market committees and Technical Advisory Groups (indiagram below: shown in light blue, light green and light yellow, respectively). Horizontal
committees exist for each LEED product line (i.e. New Construction, Commercial Interiors,
Homes, etc., see Diagram below) and are charged with overseeing the development, launch,marketing, business and operations of that product. Vertical Committees exist for each special
user class (i.e. Campuses, Healthcare Facilities, Retail, etc.) and have subcommittees responsible
for publishing guides and informing standard development for each relevant product line
examining special issues, adaptations and special treatment required for their vertical market.
Finally, Technical Advisory Groups (TAG) exist for each impact area (i.e. Indoor Environment,
Materials and Resources, Energy and Atmosphere, etc.) covered by the LEED products. The
TAGs are responsible for developing the individual credits within their impact area for eachstandard. TAGs also respond to Credit Interpretation Rulings (see above).

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Any new LEED products or modifications thereof are directed from the LEED steering
Committee to general membership for a public comment and revision process followed by a vote.
After publication of the proposed action, comments are solicited for a 30-60 period (via website).
A minimum of 30 days is allowed for comments to be collated and responses written. Resulting
changes to the action must then be approved by the steering committee. A summary of publiccomments and highlights of changes made are next published on the website for review andcomments related to the changes for a period of fifteen days. These comments are thenconsidered for up to 60 days. At any point in the process, the Steering Committee or Executive
Board can remand the action or a part thereof back to the originating committee or membershipfor further comment. The action is then balloted and 30 days given for members to cast theirvotes. Two-thirds affirmative vote and a ten percent quorum are required for passage.

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VII. Costs and Benefits of Compliance
Estimates of the relative cost of building a LEED certified building average about an
33

extra 2-4% although this is contested by some.

One study by a private consulting firm looking

at a database of 600 projects found that while costs of building green vary widely, there is no
significant difference between LEED certified and others buildings when controlling for building
34

location, type, purpose, size, etc.

The study did not account for so-called “soft-costs” such as

35

design. A GSA study looked at the cost differential for two common building federal building
projects: putting up a new mid-rise federal courthouse of around 250,000 square feet andrenovation of an existing 308,000 square foot office building. The findings put the premium
range at -.04% to 8.1% for various levels of LEED certification. A study commissioned by
California State’s Sustainable Building Taskforce found the “green premium” to cost about
36

2%.

37

Why then are organizations, increasingly (albeit still a small fraction ) exhibiting apreference to build green? Users of the LEED standard are almost evenly divided into four
categories: governments, businesses, non-profits and institutions. While incentives naturally foreach category this research focuses on incentives for businesses. A broad list of incentives forbusinesses include the desire to reduce environmental impacts, decreased operating andmaintenance costs, increased building value, higher human productivity, public relations/green
reputation, health of employees, tax incentives, and regulatory incentives.

33

Cite 30% anecdotal criticism
http://www.ecy.wa.gov/programs/swfa/greenbuilding/pdf/costinggreen.pdf
35
U.S. government’s General Services Administration.
36
http://www.ecy.wa.gov/programs/swfa/greenbuilding/pdf/KatsReport.pdf
37
Find fraction.
34

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Operating savings from building LEED certified or higher buildings is consistently
estimated as far outweighing the cost of building green.

38

A study by an independent

39

sustainability consultant commissioned by the California Sustainable Buildings Taskforce in402003 looked at 33 LEED certified or higher buildings in 19 (?) states.

The study found thatbuilding green costs from 1-8% more with an average of 1.84% or $3-$5 per square foot. The
direct financial benefits of building green that stem from lower energy, water and costs were
found to be $4-$6 per square foot based on a 20-yr net present value calculation employing a 5%
real discount rate. Less straight forward to estimate are the benefits from increases in worker
productivity and health. The report explains that a number of studies have found these to be41

significant (non-zero) but estimates range widely.

Using reportedly conservative estimators,

the California study put the health benefits at $35-55 per square foot. Therefore on energy costs
alone, the report finds that building sustainably with LEED pays for itself (albeit not at higher
discount rates), and with productivity and health benefits, the return on investment is many times
over.
Regulatory and tax incentives
have arisen rapidly in the past few

38

39

Multiple citations to be included.

NAME
Link here
41
Heschong Mahone Group, “Daylighting in Schools: An Investigation into the Relationship Between Daylightand Human Performance,” 1999. Available at: http://www.h-m-g.com; Follow up studies verified the rigor ofanalysis and subsequent research continues to show positive correlation between daylighting and student
performance;
Judith Heerwagen, “Do Green Buildings Enhance the Well Being of Workers?” Environmental Design andConstruction Magazine. July/August 2000. Available at:
http://www.edcmag.com/CDA/ArticleInformation/coverstory/BNPCoverStoryItem/0,4118,19794,00.html;William
Fisk, “Health and Productivity Gains from Better Indoor Environments,” summary of prior publications (seeAppendix J), with figures inflation-adjusted for 2002 dollars and rounded. “CEC Environmental Performance
Report.” Available at:
http://www.energy.ca.gov/reports/2001-11-20_700-01-001.PDF.
40

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years. umpteen states have now passed green building legislation as well as dumpty two
municipalities and cities. Nevada for example gives…

VIII. Conclusion
In the Darwinian competition of voluntary competing standards, only the fittest
survive. The right combination pragmatism and ideological rigidity combined with aworkable business model will be the winning combination. The challenge…

IX. Discussion Questions
1. What kind of environmental pressures does the U.S. construction industry face? What is the
problem that the U.S. Green Building Council faces in engaging multiple stakeholders into its
initiatives? Does expanding its membership help promote sustainable construction or does it
detract from it? What pressures does the U.S. Green Building Council faces in limiting
membership?

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2. How sound to you find The U.S. Green Building Council’s certification process? How can theCouncil ensure that buildings do indeed conform to code when it does not conduct on-site
audits? What are the advantages of having a bureaucratic certification process with heavy
paperwork and documentation? Is this process better than on-site audits? Why or why not?
3. The author states that the U.S. Green Building Council’s LEED standards represent a tradeoff
between fairness and flexibility. Do you feel that its rigid standards are sufficient enough topromote green building across multiple stakeholders? Or does it ultimately detract innovationfrom green leaders?
4. Evaluate the credibility and transparency of this organization with regards to the PVC case.
Can the U.S. Green Building Council realistically lie upon green building watchdogs to sanction
transgressions? What mechanisms should the Council adopt in order to ensure that theorganization abides by its precautionary principle?
5. Examine Appendix II and assess how LEED allocates its construction credits. Is this apractical way of certifying green building? Play around with the checklist and come up with two“green” buildings comprised of different characteristics that arrive at the same number of total
credits. Does one seem more “green” than the other?
6. What information would convince a consumer of the “greenness” of a building? Whether it
was built with green materials? Green processes? Or whether its green design will result into
more energy and waste reductions? In what ways does the LEED standard address these issues?
In which ways does it fall short?

X. Appendix

Appendix I: USGBC Report Card

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Average Score:

2.9

Autonomy from Target of monitoring:

1

Organizational Strength:4Capacity to carry out monitoring is uncertain as organization is hesitant to give details about staff.
Monitoring practice:4

Sources of information:

2Standards vs. Monitoring:3

Evaluations:3

Uncertain. Organization would not give anything but extremely vague information on frequency
of denial.
Sanctions:NA

It is a voluntary standard with no sanctions for non-compliance.
Transparency of Monitoring organization:

3

Highly transparent in governance and standard making process, low transparency in standard
verification and among employees.
Shadow of the state:

3Standard is voluntary although relies on government in some situations to provide incentives forcompliance.

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Appendix II: LEED New Construction Credits
LEED for New Construction v2.2
Registered Project Checklist

Project Name:
Project Address:
Yes

?

No

Sustainable Sites
Y

Prereq 1
Credit 1
Credit 2
Credit 3
Credit 4.1
Credit 4.2
Credit 4.3
Credit 4.4
Credit 5.1
Credit 5.2
Credit 6.1
Credit 6.2
Credit 7.1
Credit 7.2
Credit 8

Yes?

Construction Activity Pollution Prevention
Site Selection
Development Density & Community Connectivity
Brownfield Redevelopment
Alternative Transportation , Public Transportation Access
Alternative Transportation , Bicycle Storage & Changing Rooms
Alternative Transportation , Low-Emitting & Fuel-Efficient Vehicles
Alternative Transportation , Parking Capacity
Site Development, Protect of Restore Habitat
Site Development, Maximize Open Space
Stormwater Design, Quantity Control
Stormwater Design, Quality Control
Heat Island Effect, Non-Roof
Heat Island Effect, RoofLight Pollution Reduction

Required
1
1
1
1
1
1
1
1
1
1
1
1
1
1

No

Water Efficiency
Credit 1.1
Credit 1.2
Credit 2
Credit 3.1
Credit 3.2

Prereq 1
Prereq 2
Prereq 3
Credit 1

Credit 2

Credit 3
Credit 4
Credit 5
Credit 6

5 Points

Water Efficient Landscaping , Reduce by 50%
Water Efficient Landscaping , No Potable Use or No Irrigation
Innovative Wastewater Technologies
Water Use Reduction , 20% Reduction
Water Use Reduction , 30% Reduction

Energy & AtmosphereYYY

14 Points

Fundamental Commissioning of the Building Energy Systems
Minimum Energy Performance
Fundamental Refrigerant Management
Optimize Energy Performance
10.5% New Buildings or 3.5% Existing Building Renovations
14% New Buildings or 7% Existing Building Renovations
17.5% New Buildings or 10.5% Existing Building Renovations
21% New Buildings or 14% Existing Building Renovations
24.5% New Buildings or 17.5% Existing Building Renovations
28% New Buildings or 21% Existing Building Renovations
31.5% New Buildings or 24.5% Existing Building Renovations
35% New Buildings or 28% Existing Building Renovations
38.5% New Buildings or 31.5% Existing Building Renovations
42% New Buildings or 35% Existing Building Renovations
On-Site Renewable Energy
2.5% Renewable Energy
7.5% Renewable Energy
12.5% Renewable Energy
Enhanced Commissioning
Enhanced Refrigerant Management
Measurement & Verification
Green Power

1
1
1
1
1

17 Points
Required
Required
Required
1 to 10
1
2
3
4
5
6
7
8
9
10
1 to 3
1
2
3
1
1
1
1
continued…

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Yes

?

No

Materials & Resources
Y

Prereq 1
Credit 1.1
Credit 1.2
Credit 1.3
Credit 2.1
Credit 2.2
Credit 3.1
Credit 3.2
Credit 4.1
Credit 4.2
Credit 5.1
Credit 5.2
Credit 6
Credit 7

Yes?

13 Points

Storage & Collection of Recyclables
Building Reuse , Maintain 75% of Existing Walls, Floors & Roof
Building Reuse , Maintain 100% of Existing Walls, Floors & Roof
Building Reuse , Maintain 50% of Interior Non-Structural Elements
Construction Waste Management, Divert 50% from Disposal
Construction Waste Management, Divert 75% from Disposal
Materials Reuse , 5%Materials Reuse ,10%
Recycled Content , 10% (post-consumer + _ pre-consumer)
Recycled Content , 20% (post-consumer + _ pre-consumer)
Regional Materials , 10% Extracted, Processed & Manufactured Regionally
Regional Materials , 20% Extracted, Processed & Manufactured Regionally
Rapidly Renewable Materials
Certified WoodY
Y

Prereq 1
Prereq 2
Credit 1
Credit 2
Credit 3.1
Credit 3.2
Credit 4.1
Credit 4.2
Credit 4.3
Credit 4.4
Credit 5
Credit 6.1
Credit 6.2
Credit 7.1
Credit 7.2
Credit 8.1
Credit 8.2
?

1
1
1
1

Minimum IAQ Performance
Environmental Tobacco Smoke(ETS) Control
Outdoor Air Delivery Monitoring
Increased Ventilation
Construction IAQ Management Plan
, During Construction
Construction IAQ Management Plan
, Before Occupancy
Low-Emitting Materials , Adhesives & Sealants
Low-Emitting Materials , Paints & Coatings
Low-Emitting Materials , Carpet Systems
Low-Emitting Materials , Composite Wood & Agrifiber Products
Indoor Chemical & Pollutant Source Control
Controllability of Systems , Lighting
Controllability of Systems , Thermal Comfort
Thermal Comfort , Design
Thermal Comfort , Verification
Daylight & Views , Daylight 75% of Spaces
Daylight & Views , Views for 90% of Spaces

Required
Required
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1

No

Credit 1.1
Credit 1.2
Credit 1.3
Credit 1.4
Credit 2
?

1
1
1
1

15 Points

Innovation & Design Process

Yes

1
1
1
1

No

Indoor Environmental Quality

Yes

Required1

5 Points

Innovation in Design : Provide Specific Title
Innovation in Design : Provide Specific Title
Innovation in Design : Provide Specific Title
Innovation in Design : Provide Specific Title®
LEED Accredited Professional

1
1
1
1
1

No

Project Totals
Certified:(pre-certification estimates)
26-32 points, Silver: 33-38 points,

Gold: 39-51 points,

69 Points
Platinum: 52-69 points

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Appendix III: USGBC IRS Form 990

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Appendix IV: USGBC Conflict of Interest Policy
Appendix V: USGBC membership dues schedule
Appendix VI: State and municipal green building legislation