ENERGYSTAR
Off the Charts
The U.S. EPA ENERGY STAR® Program's E-Newsletter Covering
Energy Management for the Financial Markets
Contents
• Saving Energy by
Proxy
• Green Buildings
and Energy
Efficiency
• Connecting
Climate Change
and Corporate
Governance
• 2006 ENERGY
STAR Partner of the
Year Awards
• NAREIT
Environmental
Awards Highlight
Energy
ENERGY STAR is a U.S. EPA
partnership program that helps
business protect the environment
through superior energy managment.
We welcome your questions and
comments on how Off the Charts can
better serve your informational needs.
Please contact us at:
U.S. Environmental Protection Agency
ENERGY STAR
Phone: 888-STAR-YES
E-maii: offthecharts@energystar.gov
WWW.ENERGYSTAR.GOV
Summer 2006
Saving Energy by Proxy
Shareholders Request Corporations Review Energy and Climate Performance
Stroll into any Home Depot or Lowe's store and you're sure to find hundreds of
ENERGY STAR® qualified products. But what if you're in the market to invest in an
energy-efficient "Big Box" retailer, homebuilder, or real estate investment trust (REIT)?
Soon investors will have information to help shop for those, too.
As a result of a recent shareholder campaign, The Home Depot* of Atlanta, GA, and
Lowe's* of North Wilkesboro, NC, will report in coming months on their strategies for and
progress on making their operations more energy efficient and better for the environment.
Simon Property Group in Indianapolis, IN, the nation's largest shopping mall company, and
Liberty Property Trust* of Philadelphia, PA, a real estate manager with more than 700 office
and industrial properties, have also agreed to disclose such information in response to recent
shareholder requests.
Together, these four companies manage nearly 600 million square feet of building space.
Focus on Energy Management
The impetus for these disclosure requests comes from a group of environmentally minded
investors who see the connection between the ability of these companies to control energy
costs and their own bottom lines. They know that property managers and homebuilders
(continued on page 5)
Green Buildings and Energy Efficiency:
Diligence Pays
With energy prices forecast to rise for the foreseeable future and increasing interest
in environmentally responsible "green" buildings, it is critical that such buildings
be energy efficient. It is often assumed that a green building will be energy efficient;
unfortunately this is not always the case. Because a building can gain green certification
based on environmental factors other than energy efficiency, a building certified as green
may actually not be any more energy efficient than a typical, non-green building.
When considering the green attributes of a potential investment property, energy efficiency
should come first—it should provide the cornerstone of a property's green rating and
be of paramount consideration to any investor undertaking a green real estate purchase
or development. Energy efficiency is important not only because of the environmental
concerns surrounding energy use, but because among all potential environmental facets
of a green building it provides by far the most economic return. Cash flow and profitability
resulting from building green are largely derived through energy savings.
For investors interested in the green real estate market space, a little knowledge of current
* ENERGY STAR Partner
(continued on page 7)
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Connecting Climate Change and Corporate Governance
New Report Scores Companies on 'Climate Governance'
In recent years, climate change has emerged as a top-tier concern for companies, investors, and governments. Companies
with significant greenhouse gas (GHG) emissions or high energy use are assessing their exposure to risks arising from
new regulations and developing strategies for mitigating those risks. A new report analyzes how 100 of the world's largest
companies are positioned to compete in a carbon-constrained global economy.
Top-scoring companies have climate change clearly on their radar screens. They see how greenhouse gas emissions
controls will influence future energy use and capital investment decisions. Many are partners in EPA's ENERGY STAR or
Climate Leaders programs. While these companies typically have operations or products that produce large greenhouse gas
emissions, each has adopted sound "climate governance" practices to provide information and articulate strategies that will
bolster investor confidence as climate change rises to the top of the public agenda.
The report, Corporate Governance and Climate Change: Making the Connection, was released in March 2006 by Ceres,
a national coalition of investor, environmental, and public interest groups, based in Boston, MA. The Investor Network on
Climate Risk (INCR), a group of 50 institutional investors managing nearly $3 trillion in assets, commissioned the work.
The report profiles 76 U.S. companies and 24 non-U.S. companies from 10 of the most carbon-intensive industries: oil/
gas, electric power, autos, chemicals, industrial equipment, mining/metals, coal, food products, forest products, and air
transportation. Companies profiled in the report have major U.S. operations and rank among the largest in their respective
industries, based on market capitalization or revenues.
The Scoring System
The scoring system used in the Corporate Governance and Climate Change report rewards the following areas:
Public disclosure: Analysis of companies for this report is highly dependent on information placed in the public domain
for use by investors and other interested stakeholders. Companies with more available information on their governance
responses to climate change—as presented in securities filings, sustainability reports, corporate Web sites, CEO
presentations, and responses to third-party questionnaires (like the Carbon Disclosure Project)—generally score better than
those with less publicly available information.
Policy advocacy: This report also credits companies that are speaking out about climate change in a policy context. Though
most companies endorse voluntary actions to control greenhouse gas emissions, the scoring system particularly rewards
companies that support a government regulatory framework to address climate change and that explicitly express their own
governance responses.
Early action: The scoring system reserves the most credit for companies that have taken early actions to address climate
change and control greenhouse gas emissions, including participation in voluntary programs such as Climate Leaders and
ENERGY STAR. The Framework Convention on Climate Change (ratified by the U.S. Congress in 1992) sets 1990 as a baseline
year for reducing greenhouse gas emissions to avoid "dangerous anthropogenic interference" with the Earth's climate
system. The scoring system reserves the most points for companies that have achieved actual reductions below their 1990
levels.
Long-term planning: The scoring system rewards companies that take a long-term view of their enterprises and capital
investment decisions. Climate change presents a "governance gap" in decision making, whereby the warming effects
of greenhouse gases in the atmosphere far outlast the tenure of corporate executives and the payback periods of their
investments. Accordingly, the scoring system rewards companies that project their greenhouse gas emissions well into the
future and that seek to reduce their carbon emissions "footprint" over the life cycle of the products they sell.
(continued on page 3)
The U.S. EPA ENERGY STAR Program's E-Newsletter Covering Energy Management for the Financial Markets Summer 2006 Page 2
Off the Charts
ENERGY STAR
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The report uses a 14-point "Climate Change Governance
Checklist" to evaluate how major industrial corporations
are addressing climate change in five broad areas: board
oversight, management execution, public disclosure,
greenhouse gas emissions accounting, and strategic
planning. The report uses data from securities filings,
company reports, company Web sites, third-party
questionnaires, and direct company communications.
The report's rankings against this checklist are based on
a 100-point scoring system, developed in consultation
with Ceres and the INCR. The scoring system rewards
companies with a sustained commitment to controlling
The Results
The report's overall results are encouraging. When
Ceres commissioned a similar report from the Investor
Responsibility Research Center in 2003, it found that most
major American companies and industries were largely
ignoring or discounting climate change in their governance
practices and strategic planning. This is clearly no longer
the case.
DuPont* (the leading scorer among U.S. firms) has reduced
its greenhouse gas emissions 72 percent since 1990 and
developed forward-thinking commercial products such
Climate Change and Corporate Governance: 100 Point Scoring System
Category
Ranking Factors
Points
Board Oversight
Board committee has explicit oversight responsibility for environmental affairs.
Board conducts periodic review of climate change and monitors progress in implementing strategies.
Up to 12
Management
Execution
Chairman/CEO clearly articulates company's views on climate change and GHG control measures.
Executive officers are in key positions to monitor climate change and coordinate response strategies.
Executive officers' compensation is linked to attainment of environmental goals and GHG targets.
Up to 18
Public Disclosure
Securities filings identify material risks, opportunities posed by climate change.
Sustainability report offers comprehensive, transparent presentation of company response measures.
Up to 14
Emissions
Accounting
Company calculates and registers GHG emissions savings and offsets from projects.
Company conducts annual inventory of GHG emissions from operations and publicly reports results.
Company has set an emissions baseline by which to gauge future GHG emissions trends.
Company has third party verification process for GHG emissions data.
Up to 24
Emissions
Management
and Strategic
Opportunities
Company sets absolute GHG emission reduction targets for facilities and products.
Company participates in GHG trading programs to gain experience and maximize credits.
Company pursues business strategies to reduce GHG emissions, minimize exposure to regulatory and
physical risks, and maximize opportunities from changing market forces and emerging regulatory controls.
Up to 32
greenhouse gas emissions, disclosing data and strategies,
supporting regulatory actions, and taking practical, near-
term steps to finding lasting solutions.
The weighting system reserves the most points for
companies that are achieving absolute reductions in their
GHG emissions and seizing new business opportunities that
arise from emissions trading and provision of new products
and services. Such companies typically have a long-
term perspective that matches the investment horizons
of retirement systems and endowment plans, which must
look to the future well-being of their beneficiaries.
as energy-efficient building materials, components for
solar, wind, and fuel cell systems, and next-generation
refrigerants with low global warming potential.
The report also documents, however, that dozens of U.S.
firms in various climate vulnerable sectors—including
some leading electric power and oil companies—are
not scoring well in relation to the checklist because they
are failing to devise and communicate clear strategies to
address climate change.
* ENERGY STAR Partner
(continued on page 4)
ENERGY STAR
Off the Charts
The U.S. EPA ENERGY STAR Program's E-Newsletter Covering Energy Management for the Financial Markets SlIITllTlGr 2006 PaQG 3
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2006 ENERGY STAR Partner of the Year Awards
EPA's ENERGY STAR Partner of the Year Award singles out companies with world-class energy management programs and
bestows this honor at a recognition ceremony in Washington, DC every year. Organizations that win this award have achieved
significant energy savings through strong energy management programs.
Sustained Excellence in Energy Management winners are:
Winners for Excellence in Energy Management:
• 3M
• California Portland Cement Company
• Food Lion
• Ford Motor Company
• Giant Eagle, Inc.
• Frito-Lay
• Toyota Motor Manufacturing North America, Inc.
• Gresham-Barlow School District
• Transwestern Commercial Services
• Marriott International, Inc.
• USAA Realty Company
• Merck & Co., Inc.
• New York Presbyterian Hospital
Connecting Climate Change and Corporate Governance ...continued from page 3
Low climate governance scores were prevalent among
entire sectors, such as coal companies, whose carbon-
intensive fuel could make them especially vulnerable
to greenhouse gas regulations; food and forest product
companies, which are susceptible to natural resource
impacts from climate change; and airlines.
Challenges Ahead
Given the sweeping global nature of climate change, climate
risk has become embedded, to a greater or lesser extent,
in every business and investment portfolio. The challenge
ahead for all companies—including the leaders on climate
governance—is formidable, given the need to cut GHG
emissions substantially below current levels in order to halt
rising global temperatures. In turn, the role for investors is to
encourage business leaders and government policymakers
to plan for the long term, knowing that efforts to stabilize
atmospheric concentrations of carbon dioxide (C02)
emissions must accommodate a growing global economy
and energy use that is projected to double by 2050.
"This report is extremely valuable because it provides
investors with an unprecedented window into how
companies most affected by climate risk are responding
at the board level, through CEO leadership, and in
strategic planning," said Connecticut State Treasurer
Denise L. Nappier, whose $22 billion investment fund is
among 50 institutional investors in INCR. "While strong
climate governance practices are not yet the norm at U.S.
companies, this report plainly illustrates that there are
industry leaders showing the way."
The Corporate Governance and Climate Change report
concludes that investors must engage corporate boards
and company managers to ensure that they have
comprehensive climate governance strategies in place.
Information, resources, and tools for informing corporate
governance decisions and the design of climate risk
management practices are available from government
initiatives such as the U.S. EPA's Climate Leaders and
ENERGY STAR Programs. These programs can also
provide useful background and benchmarks for investors
and analysts seeking to conduct their own climate risk
evaluations.
Climate Governance: Average Industry Scores
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Proxy Votes on Energy and Climate Performance ...continued from page 1
play a critical role in shaping the nation's energy demand
and greenhouse gas emission trends. According to the
U.S. Department of Energy (DOE), energy use represents 30
percent of commercial building operating costs, and energy
use by commercial buildings contributes 15 percent of U.S.
greenhouse gas emissions.
With energy prices and concerns about global warming
on the rise, more attention is being focused on how
companies are controlling their energy consumption.
However, few companies report on their energy use and
energy management strategies in their annual reports,
securities filings, or on their corporate Web sites.
Shareholder proponents led by the Nathan Cummings
Foundation, the New England Yearly Meeting of Friends
Pooled Funds (Quaker), and the Sierra Club Mutual
Funds began filing shareholder resolutions with major
homebuilders and commercial property managers in 2005,
asking them to assess "rising regulatory, competitive, and
public pressure to increase energy efficiency" and report
their findings to shareholders.
Change in the Big Box
Energy efficiency shareholder advocates got a boost in
October 2005, when Wal-Mart* announced that it would
* ENERGY STAR Partner
invest $500 million a year in technologies to reduce its
stores' greenhouse gas emissions by 20 percent within
7 years, mainly through energy efficiency measures.
Wal-Mart is the world's largest Big Box retailer, with
3,800 stores in the United States and 6,000 worldwide.
As Wal-Mart CEO Lee Scott explained at the time, "If you
had told me 12 or 18 months ago that we would be doing a
focus on the environment, I would have told you that would
be a good public relations campaign, nothing more. But
the truth is, the more we learned, the more opportunity we
saw for Wal-Mart."
Wal-Mart is not alone. The Home Depot and Lowe's arrived
at the same conclusion 4 months later. Having received
energy efficiency shareholder proposals for their 2006
annual meetings, they agreed in February to issue detailed
reports on their energy management programs in exchange
for having the resolutions withdrawn. Lowe's report is due
in September 2006. The Home Depot will issue its report
in February 2007. (See box for a comparison of energy
efficiency commitments made by Wal-Mart, The Home
Depot, and Lowe's.)
The 2006 Proxy Season
Altogether, ten homebuilders, commercial property
managers, and Big Box retailers received shareholder
(continued on page 6)
Energy Use Commitments by Three Big Box Retailers
Wal-Mart Stores
has set goals to
The Home Depot
is developing goals to
Lowe's
has pledged to
Design a 25% more energy-efficient store within
3 years
Disclose number of stores with ENERGY STAR® or
LEED certification
Disclose electricity use per square foot of store
and warehouse space
Reduce stores' greenhouse gas emissions 25%
within 7 years
Estimate annual cost savings from energy
efficiency measures
Set policy on energy efficiency and integrated
management system
Reduce solid waste in U.S. stores by 25% within
3 years
Set targets for renewable energy use and total
energy reductions
Disclose power purchased from renewable
energy sources
Increase truck fleet's fuel efficiency by 25% in
3 years, and double it in 10 years
Estimate GHG emissions avoided through energy
efficiency measures and set targets
Provide information on SmartWay certified
partners for shipping, where possible
Set long-term goal for zero waste and 100% of
energy supply from renewable sources
Set formal policies on energy efficiency and O&M
programs targeting energy efficiency
Consider disclosure of GHG emissions and
possible targets for renewable energy use
Off the Charts
The U.S. EPA ENERGY STAR Program's E-Newsletter Covering Energy Management for the Financial Markets
Summer 2006 Page 5
ENERGY STAR
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Proxy Votes on Energy and Climate Performance ...continued from page 5
proposals during the 2006 proxy season asking these
companies to assess and report on their progress in
increasing the energy efficiency of their operations. With
four withdrawal agreements and exclusion of one proposal
by the Securities and Exchange Commission, five of the
resolutions are coming to votes.
At companies known for their attention to energy efficiency
and clean energy, proposals may have been seen as less
urgent or necessary. Only 5.5 percent of the shares voted
were in favor of the proposal at homebuilder D.R. Horton*
in Fort Worth, TX, which has been recognized with the
ENERGY STAR Partner of the Year award for "Excellence in
Efficient Homes" at its Sacramento, CA, division. At Whole
Foods Market, a natural foods chain based in Austin, TX,
less than 9 percent of the votes were cast in favor of its
energy efficiency proposal. Whole Foods has pledged to
purchase all of its energy needs from wind power, making
it the nation's largest private sector purchaser of renewable
energy, but has not developed an energy efficiency plan,
(see http://www.epa.gov/greenpower/partners/top25.htm)
At Standard Pacific's* May 10 annual meeting in Irvine, CA,
however, the homebuilder saw support for its shareholder
proposal soar to 39.3 percent. That vote was the highest
ever for a proposal on energy efficiency or climate
protection. Unlike the companies mentioned previously,
Standard Pacific had relatively little information to share
about its energy efficiency programs, saying that its
managers respond to local market conditions.
The proposal at Bed Bath & Beyond* of Union, NJ, received
a 26 percent favorable vote, while the votes have not yet
been tallied at homebuilder Centex* in Dallas, TX.
REIT Disclosures
Two retail real estate investment trusts negotiated
withdrawal of their shareholder proposals, and one has
already made good on its pledge to increase its disclosure
on energy efficiency. Simon Property Group added three
paragraphs to its annual Form 10-K securities filing, issued
on March 31,2006.
Under the heading "Energy Costs Conservation," Simon
reported that it began monitoring and benchmarking its
* ENERGY STAR Partner
energy consumption in 2003 and started "a process to
assess energy efficiency across our enclosed mall proper-
ties." This effort grew into a comprehensive strategy to
improve energy efficiency in 2004, when the company
launched its "Energy Best Practices Program," a program
that mirrors ENERGY STAR in large part.
Simon Property Group expanded its energy monitoring
efforts in 2005 with a Web-based tracking tool for managers,
which allows them to review energy use and track costs in
real time. In 2004 and 2005, Simon cut its overall electricity
use by 6.8 percent compared with 2003 levels. The savings
avoided more than 84,000 metric tons of carbon dioxide
(C02) emissions, or enough electricity to power nearly 10,800
U.S. homes for a year, according to company estimates.
These results have been recognized by the National
Association of Real Estate Investment Trusts, which awarded
Simon with its 2005 Leader for the Light Award. (See
NAREIT Awards on page 7.)
Liberty Property Trust* also plans to expand its reporting on
its energy efficiency programs in its next Form 10-K filing. In
a memo to the New England Friends, which submitted the
proposal, company general counsel James Bowes said that
Liberty "would provide, in reasonable detail, a discussion of
the projects and steps undertaken" in 2006 "in furtherance
of these efforts, and would also include, to the extent
reasonably practicable, quantitative measure of the success
of these efforts."
As in discussions with other companies, the proponents want
Liberty to be able to document how its energy efficiency
programs are affecting its financial performance.
Future Directions
Given the progress made in recent months, shareholder
proponents believe the campaign to promote energy
efficiency in the buildings sector has "legs" that extend into
future years, and they now have backing from some of the
nation's largest institutional investors. The California Public
Employees' Retirement System, for example, now routinely
supports shareholder resolutions that seek systematic
disclosure of energy use and energy management strategies
by homebuilders and property managers.
(continued on page 7)
ENERGY STAR
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The U.S. EPA ENERGY STAR Program's E-Newsletter Covering Energy Management for the Financial Markets Slimmer 2006 Page 6
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Green Buildings ...continued from page 1
green building issues will go a long way towards ensuring
that a green asset meets financial expectations.
What makes a building green?
In the U.S. real estate market there are a number of green
building rating systems and guidelines currently competing
to provide the definitive answer to this question. Of these,
the most widely recognized program is the U.S. Green
Building Council's Leadership in Energy & Environmental
Design (LEED) certification. Other programs include Green
Globes, administered by the Green Building Initiative, and
the Federal Sustainable Buildings Principles.
Most green building certification systems rate the
"greenness" of buildings by awarding points for clearly-
defined, environmentally preferable construction, design,
and systems. These attributes include a range of factors
in addition to energy efficiency: choice of materials and
location, indoor air quality, water usage, emissions, etc.
Most systems offer tiered levels of recognition, such as
Gold, Platinum, 3 Globes, 4 Globes, and so on, depending
upon the number of points a building earns.
Green rating systems differ in their definition and weighting
of the various environmental attributes, their means
for assigning points, and their certification process.
Additionally, these rating systems have varying minimum
requirements, relationships to building codes, certification
processes and costs, and certifier training requirements.
These rating systems are by nature flexible—they provide
only general guidelines for a building's development team
across multiple categories. None of the major green
certification programs currently require buildings to meet a
set of core green requirements beyond code, instead, they
allow builders flexibility to meet the green threshold by
accumulating a minimum number of points from any of the
various categories. Consequently, achieving certification
as a green building does not necessarily have to involve
energy-efficient design, construction, or operation.
For investors interested in developing or purchasing
green properties, an understanding of the scoring and
methodology underlying the various rating systems is
especially important when gauging the energy efficiency of
any certified green property.
(continued on page 8)
NAREIT Environmental Awards
Highlight Energy
In fall 2005, the National Association of Real Estate
Investment Trusts (NAREIT) launched a unique recognition
program for its members called Leaders in the Light. The
award, as NAREIT Senior Vice President of Finance and
Operations Sheldon Groner states, "recognizes company-
wide operations which generate substantially improved
energy efficiency and expense management."
Four members where recognized in 2005. They are:
• Trizec Properties*
• Simon Property Group
• Arden Realty"
• Glenborough Realty Trust*
To put this award in perspective, Trizec Properties, for
example, has reduced energy consumption by 15 percent
from its base year of 2000. According to the REIT, this
translates to saving almost $16 million annually across its
37 million square foot portfolio. The environmental impact
of Trizec's program translates into a reduction of carbon
dioxide (C02) emission by approximately 690,000 tons
per year as compared to the base year. This reduction in
C02 emissions is equivalent to removing approximately
125,000 vehicles from the nation's highways.
ENERGY STAR Partner
* Past ENERGY STAR Partner of the Year
Proxy Votes ...continued from page 6
These funds are themselves major property owners and are
finding that they, too, have to "walk the talk" when it comes
to achieving energy savings. CalPERS owns approximately
$5 billion of core real estate that includes investments in
office, retail, industrial and apartment properties. Its board
has set an energy reduction goal of 20 percent for these
properties over the next 5 years.
"Besides collecting information [on energy use], we
strongly support shareowner resolutions at individual
companies to address environmental impacts," said Chuck
Valdes, Chair of CalPERS Investment Committee in March
2006. "In the long run, we believe it's possible to do well in
business by doing what's good for the environment."
ENERGY STAR
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Green Buildings
..continued from page 7
The Energy Factor
Commercial buildings account for 18 percent of total
U.S. energy consumption and contribute an estimated
15 percent of U.S. greenhouse gas emissions. When
considered over a building's 40-50 year lifespan, the
energy-related environmental impacts of a building's
operations dwarf the impact of energy and fossil fuels
consumed during its construction. Reducing a building's
energy consumption has a major beneficial impact on
the environment, a point not overlooked by the National
Association of Real Estate Investment Trusts (NAREIT),
which recognizes the significance of energy-efficient
buildings through its environmental awards programs.
(See NAREIT Awards on page 7)
Energy consumption represents 30 percent of a typical
commercial office building's operating costs, making it the
single largest controllable cost of operations, so improved
energy efficiency has a direct and substantial payback for
investors. For example, a 30 percent reduction in energy
use (commonly achievable in the average commercial
office building) can yield the equivalent of a 5 percent
increase in Net Operating Income (NOI) and overall asset
value. The U.S. EPA estimates that the 2,500 buildings that
have earned the ENERGY STAR label for energy efficiency
through 2005 save a combined $350 million on their
energy bills when compared with similiar buildings having
average energy consumption.
Consequently, one of the strongest selling points for green
construction is reduced operating costs from increased
energy efficiency. In fact, much of the "business case"
for green buildings is founded on the assumption that a
certified green building will be more energy efficient than
a conventional building. However, this assumes that all
certified green buildings have scored meaningful points for
energy-efficient design and actual energy performance.
Unfortunately, it is possible under some rating systems
to achieve a green rating without actually achieving
meaningful energy efficiencies. As a result, some property
owners are now finding that their green buildings are
actually less energy efficient than many conventional
buildings.
Designing to Achieve Energy Efficiency
Energy-efficient design strategies encompass a wide
range of traditional building construction elements,
including building envelope design, mechanical systems,
HVAC, lighting, controls systems, and so on. Green design
budgets must take care not to sacrifice these fundamentals
in order to accommodate headline-grabbing "green
technologies" that may have a much smaller impact on
overall energy performance. For example, a project may
spend green funds on a few solar panels at the expense
of better window glazing, which dollar-for-dollar yields far
greater energy savings and pollution prevention.
Another concern for investors in the market for energy-
efficient real estate is the growing assumption that a
building designed and modeled to exceed energy codes by
30 percent will achieve a parallel 30 percent improvement
in energy performance. Building energy code, however,
is not a performance metric of actual energy use, nor is
it a good proxy of future energy performance. Studies
conducted by the New Buildings Institute and others have
shown that exceeding building codes is not a guarantee of
future energy performance.
A more effective way to design for energy efficiency
is to set an energy target derived from actual building
performance data and let that target inform modeling
exercises and design choices. Furthermore, the ways in
which a building is operated are often greater determinants
of energy efficiency. If a building's energy-efficient design
relies on operating procedures that are not followed by its
operators, the design intent is lost.
The following page includes a checklist of questions to ask
about energy performance to help ensure a sustainable
construction investment.
Off the Charts
The U.S. EPA ENERGY STAR Program's E-Newsletter Covering Energy Management for the Financial Markets
Summer 2006 Page 8
ENERGY STAR
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Green Buildings
..continued from page 8
Questions To Ask About Energy Performance
For investors interested in energy efficiency in either conventional or green construction, meaningful answers to a few questions
will go a long way towards ensuring a sustainable investment.
If investing in an existing building: Is the building among the most energy efficient in the country?
~ To determine how a building's energy use compares to other similar buildings in the country, the U.S. EPA's ENERGY STAR program
developed an energy performance rating system that rates a building's energy efficiency on a scale of 1 -100. A building that scores
in a 75 or above on this scale (placing its energy performance among the top 25 percent among similar buildings) can earn an
ENERGY STAR label. Receiving a rating for a building is easy and can be done at the energystar.gov Web site using Portfolio Manager,
a free, on-line tracking and benchmarking tool.
~ Over 27,000 buildings have been rated, and more than 2,800 of them have earned the ENERGY STAR label to date. When considering
an investment in an office building, hospital, hotel, supermarket, or other type of building, ask for its EPA energy performance rating.
If investing in a new construction project: Has an energy target been established?
~ New construction project teams often promote building designs that are energy efficient, but do not always provide an estimate of the
completed and commissioned building's expected energy to owners and investors. Many green building rating systems and programs
targeting energy efficiency in building design rely on computer modeling primarily concerned with estimating if a design exceeds the
building code, which is not an indicator of how much energy the building will use.
~ Establishing energy targets can help drive energy-efficient design choices; energy efficiency goals should be set based on comparisons
to actual building energy use. EPA's Target Finder tool provides an easy way to develop an energy use target tailored to a specific
design project. Target Finder provides a realistic energy consumption target for a building design and estimates the 1 -100 rating for
the completed building project. Any building design with a score over 75 can earn the distinction of being Designed to Earn the
ENERGY STAR.
~ Investors should ask about a new building design's estimated energy use and if it is Designed to Earn the ENERGY STAR.
If investing in a green certified building: What method or system was used to certify the building? Did it earn points
for energy efficiency?
~ Because of the flexibility of most green building rating systems, a building with poor energy efficiency can be certified as green. Since
energy-related points may not be required by a particular green rating system, it is important to evaluate how the property was rated
on energy. Additionally, since green recognition is often given to a building prior to it being fully occupied and commissioned, it is
important to determine if the fully-commissioned building has achieved its intended efficiency.
~ If the building has been operating for at least one year, it should be benchmarked for energy efficiency using the ENERGY STAR Portfolio
Manager tool and against its energy target.
Are there proper investments in the building envelope, mechanical systems, lighting, and controls systems?
~ Energy-efficient buildings have efficient components and systems that are properly designed and sized and are actively managed once
occupied. It is important to make sure that these investments are not subverted in the name of green design or value engineering.
What is the commissioning strategy for the building?
~ Specifying and installing the latest energy saving technologies may make little impact unless these technologies are properly
commissioned along with other building systems. New technologies often require more attention during commissioning. Be sure that
the project budget includes proper funding for commissioning.
The U.S. EPA ENERGY STAR Program's E-Newsletter Covering Energy Management for the Financial Markets Summer 2006 Page 9
Off the Charts
ENERGY STAR
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