Sustainable homes

Homebuilding imposes very significant environmental and social costs at local, national and global levels. Housing in the UK contributes around 27% of the total CO2 emissions associated with energy use, and domestic energy use is projected to rise by 6% by 2010. Typical newly built homes in the UK use three and a half times more energy than those in Denmark and Germany. Also, a high proportion of the 70% of timber used in UK construction goes into the housing sector, most of which is not certified as having come from sustainably managed forests. Additional but unseen impacts of new home construction include: quarrying to provide basic raw construction materials like aggregates, water consumption, and the widespread use of toxic chemicals in building materials (which can also pose significant health risks for the occupants and have severe environmental impacts). Of equal and perhaps greater significance (though not so well documented) are the wider environmental costs associated with the provision of transport and other infrastructure to housing developments. Currently, little is done to incorporate sustainability factors into infrastructure design and development.

Poorly planned and designed homes and communities also impose significant social costs. A 1997 Royal Institute of Chartered Surveyors study estimated that poor quality public housing costs around £246 million a year in terms of extra health care, crime and fire service costs. The impact on the mental and physical health of individuals can also be staggering. An estimated 2.7 million English households currently live in poor conditions, with the most vulnerable living in the worst housing. Around 2.5 million homes are estimated to be cold enough to cause ill health. In any one winter, Britain has around 40,000 more deaths during December and March than in other months – a much larger ’winter excess’ than most other comparable European countries – which has been attributed to old, poorly insulated and poorly heated housing.

If the UK is to reduce its environmental and social impacts, substantial changes need to be made to how we plan, design, build, refurbish and live in our homes. For its part, the government has introduced a series of policies and commitments, backed by new legislation and regulation, intended to deliver more cohesive, successful and sustainable communities over the long term. The Housing Corporation, English Partnerships and Regional Development Authorities are also setting increasing tougher standards for private developers. In December 2006, the Department for Communities and Local Government (DCLG) announced the introduction of a new Code for Sustainable Homes, which will form the basis of future building regulation. By 2016, all homes built in the UK will be zero carbon.

• Working with WWF to publish two benchmarks (in 2004 and 2005) of major UK-listed developers’ performance and reporting on sustainability issues.
  
• Influencing public policy, by hosting a meeting for major housebuilders to discuss sustainability issues with the UK Housing Minister.
  
• Promoting better management of sustainability issues by publishing a comprehensive web-based tool-kit for housebuilders to provide detailed guidance on the wide range of resources available to support companies in this sector to manage sustainability issues.
  
• Launching, with WWF and other stakeholders, NextGeneration, an initiative that takes forward and extends regular benchmarking of developers' performance and reporting on sustainability.

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Benchmarking UK house-builders

In January 2004, in partnership with WWF, Insight published a benchmarking study, "Building towards sustainability", evaluating how well the UK’s leading listed house-builders were managing and reporting on sustainability issues. Based on our assessment of best practice in the areas of governance and risk management, managing environmental impacts and managing societal impacts, we established a set of 18 criteria against which we evaluated each company’s performance. Companies were first assessed on the basis of their publicly available financial and sustainability reports and material on their websites. We then met with each company to review that analysis and discuss its practices and performance on each of the issues in question.

The final results of the study revealed that, while the house-builders had begun to recognise the growing importance of sustainability issues to their businesses, few had well-developed strategies, policies and practices to address them effectively. The two companies that came closest to meeting best practice were Countryside Properties and The Berkeley Group. However, most lagged far behind best practice. The analysis also revealed that companies’ public disclosure of information on sustainability issues was quite poor and inconsistent. In addition, our research yielded a wealth of detailed information about the nature and quality of each company’s management of individual sustainability issues, from climate change to waste management and health and safety.

In order to assess whether companies had made any progress on managing and reporting on sustainability issues, we repeated our analysis during 2005 and published the results of the follow-up benchmark in our report "Investing in sustainability" in September of that year. The results showed a substantial improvement in the practices and reporting of all 12 house-builders assessed. The average score, based on an evaluation of companies’ practices, increased from 47% in 2003 to 68% in 2005. On the whole, the companies demonstrated a much better understanding of the relevance of sustainability issues to their business, although there was still significant scope for improvement. Crest Nicholson, The Berkeley Group and George Wimpey emerged as the leaders; others – McCarthy & Stone, Bellway, Barratt and Wilson Bowden – demonstrated substantial improvement. In most cases, the companies had implemented many of the specific recommendations we made to them. The 2005 analysis also showed that, while all of the companies had improved their reporting on sustainability, their disclosures were still not comprehensive and, thus, did not paint a complete picture of the work they are doing in this area.

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Influencing public policy

In November 2004, Insight hosted a meeting for UK housebuilders with Keith Hill, the then Housing and Planning Minister, to enable the developers to raise concerns and to put forward their views on the challenges they face in integrating sustainability into the homes they build. The issues discussed included: constraints within the planning system that hinder full consideration of sustainability issues; the changes needed to building regulations to promote more sustainable building; what fiscal measures would be most effective in encouraging developers to build more sustainable homes; how the proposed Code for Sustainable Buildings might be most effectively promoted and implemented; what could be done to further stimulate demand for sustainable homes and how developers could capture and articulate the contribution of sustainability to their businesses, and to shareholders.

Robert Napier, WWF’s Chief Executive, chaired the event. The Minister emphasised the government’s commitment to the Sustainable Communities agenda, and welcomed WWF’s OMSH campaign, which HBOS, and Insight, had been supporting throughout the year. The Minister also stated the view that all parties – environmental groups, Government, investors and house builders – should work together on sustainable housing and community issues and thanked Insight for providing a forum within which to do that.

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Promoting best practice

In March 2005, Insight worked with WWF and Upstream, specialist consultants in the sustainability and construction arena, to produce a comprehensive web-based tool-kit for housebuilders to provide detailed guidance on the wide range of resources available to manage sustainability issues.

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NextGeneration

In December 2006, Insight, along with WWF, The Housing Corporation and Upstream, launched NextGeneration – a partnership to deliver sustainable homes for 21st century living run by Upstream Strategies, consultants specialising in sustainable construction and property management. One of the principal outputs of the initiative will be annual benchmarks that assess the progress of the UK’s home builders towards building sustainable homes.

In October 2007, NextGeneration published its first benchmark of the practice and reporting of the UK’s 20 largest home builders with respect to sustainability. This follows on from the two previous benchmarks, described above, carried out jointly by Insight and WWF since 2003. All developers were awarded a score for the quality of their reporting on sustainability whereas a score was only assigned for the sustainability practices of the eleven companies that are members of NextGeneration, following extensive engagement with them.

The report, ‘Building a sustainable future: UK home builders’ progress in addressing sustainability’ (insert link) shows that the top ranked companies are:

• The Berkeley Group
• Taylor Woodrow*
• George Wimpey*
• Countryside Properties
• Crest Nicholson

(*These companies have since merged to form Taylor Wimpey).

Overall, while many companies in the sector seem to recognise the need to deliver more sustainable homes and communities, and to respond to climate change particularly, the analysis shows that most still have a great deal to do to be in a position to deliver zero-carbon homes by 2016 – the target the government set the industry this year.

As the report outlines, companies have made good progress in some areas: 65% have published a corporate sustainability policy; 65% have waste management strategies in place; and 60% have set targets to improve the energy efficiency of their homes. However, while 60% recognise climate change as a significant issue, none has a climate change policy in place. Only 25% of the companies have an understanding of the carbon footprint of their operations and only 15% have a sustainable procurement policy in place.

The report provides extensive commentary on which aspects of sustainability the developers are making good progress on, and which they are not. It also provides a series of recommendations to government and the following recommendations to the home builders.

• Seek to understand and better articulate the commercial implications – both risks and opportunities – of the sustainability issues facing the sector.
• Seek to understand the commercial value of sustainability to core business operations and include commentary on this in financial presentations.
• Develop a strategic approach to climate change by introducing corporate policies and setting short- and long-term targets aligned to the government’s targets to reduce carbon emissions of both operations and product.
• Innovate and experiment to understand the commercial, technical and customer implications of building homes to the levels in the Code for Sustainable Homes and publicly share best practice.
• Implement a communications strategy to address how sustainable housing can be better marketed to the customer and to promote more sustainable lifestyles among occupiers.
• Think holistically about operations to ensure that cost savings in sustainable materials specification and construction waste management are captured by the whole business.

In 2008, NextGeneration will conduct in-depth analysis and benchmark how the UK’s largest home builders are addressing climate change – the most pressing aspect of sustainability facing the industry today.

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Publications

Reports

"Building a sustainable future 2007" Full Report

"Building a sustainable future 2007" Executive Summary

"Investing in sustainability 2005" Full Report

"Investing in sustainability 2005" Executive Summary

"Building towards sustainability 2003" Full Report

Briefings

"Does investor engagement deliver corporate change?"

"Sustainability demands facing the house-buildng sector looks set to mount" Page 13

"House-builders make good progress integrating sustainability into mainstream business practices" Page 6-7

"Home-buyers want environmentally friendly homes, new research reveals" Page 7

"Building towards sustainability: performance and progress amoung the UK's leading house-builders" Page 5