Green Labels Does monitoring and recertification matter

Green Labels: Does monitoring and recertification matter? : Informing responsible investors on the differences of sustainable building certifications with special reference to Malaysia Prof. Sarah Sayce Ainoriza Mohd Aini School of Surveying & Planning, Faculty of Art, Design and Architecture Kingston University London 1

ERES 2011 * EINDHOVEN Introduction • Malaysian property investors who pursue responsible property investment (RPI) principles may place greater significance on the certification of a building than do investors from the wider international community. (Mohd Aini, 2010) • • Why this seemingly greater reliance may be occurring ? Does monitoring and renewal of the certification matter? Monitoring and renewal = greater assurance to investors? What can we learn from other green certifications? i. e. ISO 14001, Forest Stewardship Council (FSC) and Fairtrade Mark 2

ERES 2011 * EINDHOVEN This paper. . . • Addresses the key practical considerations of – voluntary nature of most certificates – monitoring of actual against expected building performance and a lack of monitoring of adherence to the standard during the building life. • Explores whether the introduction of monitoring and the need for renewal of the certification may be important factors in providing investors with greater assurance that highly rated buildings do indeed satisfy their sustainability aspirations. 3

Green Building Certifications ERES 2011 * EINDHOVEN • Over a twenty year period a number of green building certifications schemes or labels have been introduced around the world. • 38 different rating tools certification system worldwide (Reed et al. , 2009). • National and regional ratings established. Eg: BCA Green Mark (Singapore), Green Building Index (Malaysia) UK EUROPE AMERICAS Rest of the World Green Star (Australia & NZ) BREEAM (U. K. ) LEED (USA, Mexico, Brazil) LEED (India, UAE, China) DGNB (Germany) Green Globe (USA, Canada) CASBEE (Japan) VERDE (Spain) HK-BEAM (Hong Kong) BCA Green Mark (Singapore) ABRI (Taiwan) GBAS (China) Green Building Index (Malaysia) Lotus (Vietnam) GBTool (South Africa) 4

Green Building Certifications: A spreading industry. . ERES 2011 * EINDHOVEN • Use of certification spreading - including Malaysia and Singapore. • Some demonstrating cognisance of the take up and monitoring issues. World Green Building Council Membership 2010 5

ERES 2011 * EINDHOVEN Malaysia’s Green Building Index • GBI was launched In 2009 - customised to suit the local context including the tropical climate, economic development and the existing type of building stock. • Non-government voluntary effort by groups such as Malaysia Institute of Architects (PAM) and Association of Consulting Engineers, Malaysia (ACEM). • Subject to reassessment every 3 years. 6

Singapore BCA Green Mark Scheme ERES 2011 * EINDHOVEN • Launched in 2005 by the Building Control Authority (BCA) • Government led scheme. • The only mandatory certification in the world (Tan, 2008): - all new building works gross floor area of 2, 000 m 2 or more; - additions or extensions to existing buildings which involve increasing the gross floor area of the existing buildings by 2, 000 m 2 or more; and - building works which involve major retrofitting to existing buildings with gross floor area of 2, 000 m 2 or more. • Subject to reassessment every 3 years 7

BREEAM, LEED, Green Star, BCA Green Mark LEED GREEN STAR BCA Green Mark Green Scheme Building Index 2009 Launch Date 1990 1998 2003 2005 Ratings Pass/Good/Very Certified/Silver/ One Star/Two Star/ Certified, Three Gold+, Platinum Gold, Platinum ERES 2011 * EINDHOVEN Good /Excellent/Outstand Gold/ Platinum ing Star/Four Gold, Certified, Silver, Star/Five Star/ Six Star Certification Body BRE USGBC GBCA GBI Voluntary Mandatory Voluntary 116, 000 certified, 40, 379 (36, 588 USA + 285 Certified, 155 480 Green Buildings (4) /Mandatory Number of building registered/ certified Certification Cost* 714, 000 registered (1) £ 740 -1, 500 3388 Abroad)(2) Registered 12 certified (6 non-residential) (3) (5) £ 133 -11, 331 £ 2, 015 -4, 030 £ 5, 296 – 11, 562** £ 1, 014 – 9, 125 (5) ** 8

ERES 2011 * EINDHOVEN Reliance on Green Building Certifications • Growing number of labelling schemes is an indication of the serious intent of those procuring buildings to address sustainability issues. However, • Various certification schemes may create confusion amongst stakeholders especially property investors; who purchase buildings in different countries, • an understanding of the many differences between each market has been increasingly harder to understand (Dixon et al. , 2008). • Unrecognised certification systems as well as lack of coordination or consistency in rating tools are holding back the interests of potential stakeholders (Chan, Qian, & Lam, 2009). 9

Previous research : • Business case benefit of green building certification (Eg: Miller, Spiver, & ERES 2011 * EINDHOVEN Florance, 2008; Eicholtz, Kok, & Quigley, 2009) • Importance certification to market green buildings (see for example Ofori (2004). • Experts say Green building certification is regarded as important to both international and Malaysian investors, but is of greater importance within the Malaysian context. (Mohd Aini, 2010) why should this have greater importance within the local context ? Whether or not a ‘one-off’ certification plays any role in enhancing investors’ trusts that a building is truly sustainable. ? 10

ERES 2011 * EINDHOVEN New Vs In-Use • The earlier versions of BREEAM and LEED (e. g. : LEED-New Construction, LEED-CI) were exclusively awarded at the beginning the design stage. • Certification is based on estimated points systems instead of the actual performance of the buildings. Buildings are rated before showing the construction meets design specifications. We ask how investors can know if a building can/will actually perform throughout the lifecycle and, in short, whether the certification can be trusted? • Enter certifications for existing buildings/ in-use (i. e. LEED EBOM, BREEAM In-Use) reassessment introduced. 11

Validity and Renewal Year Annual Recertification/ Launched ERES 2011 * EINDHOVEN Rating Tools Surveillance Reassessment LEED-EBOM (previously LEED-EB V. 1 and V 2. ) 2008 a unknown Every 1 to 5 Years BREEAM- In Use 2009 (2002) Every 1 -3 years 2007 -Pilota Only if necessary n/a BCA Green Mark 2005 b n/a Every 3 years Green Building Index May 2009 n/a Every 3 years GREEN STAR building) Office Existing n/a Source: Compiled by authors a Yudelson (2010) b BCA (2011) http: //www. usgbc. org/Show. File. aspx? Document. ID=8876 http: //www. breeam. org/filelibrary/BREEAM%20 In%20 Use/SD 096_-_Rev_17_BREEAM_In-Use_Scheme_Document. pdf http: //www. bca. gov. sg/greenmark/green_mark_buildings. html [4] http: //www. greenbuildingindex. org/how-GBI-works. html [1] [2] [3] 12

New Vs In-Use ERES 2011 * EINDHOVEN • LEED-New Construction resembles a snapshot of the building’s expected energy and environmental performance during construction and for the period immediately following occupancy. By contrast LEED-EBOM is more like a movie of actual performance during continuing operation over time of the performance period. Where LEED NC estimates future energy and water use, LEED EBOM actually measures and report them, compared with established standards such as ENERGY STAR and the current plumbing code” (Yudelson, 2010, p. 58) 13

Other green certifications ? 14

Are not ‘one-off’ certifications Schemes Year Industry Launch Award Validity/ Renewal ed 1997 Green Seal ERES 2011 * EINDHOVEN Food Alliance Annual monitoring/ surveillance Food/ Agriculture 3 years Yes 1989 Consumer products Varies Unknown Fair. Trade 1988 Consumer products 3 years Yes Marine Stewardship Council -Fisheries -Chain of custody and Restaurant 1997 ISO 14001 Environmental management systems) 1996 Management Systems 3 years Yes Forest Stewardship Council 1993 Wood Products 5 years Yes EU Eco-Labels 1992 Products / manufacturing/ service providers/ retailers 3 -5 years Unknown (depending on the product group) (formal) (Coffee, Chocolate, Banana, Cotton) Fish Yes Max 5 Years Max 3 years 15

ISO 14001 ERES 2011 * EINDHOVEN • ISO was founded in 1947. More than 18, 000 international standards that provide practical tools for all three dimensions of sustainable development: economic, environmental and societal (ISO, 2009 a). • ISO 14000 family was introduced in 1996. The most important standards is the EMS specification standard, ISO 14001 = indicator of a company’s commitment to environmental responsibility. • By the end of December 2009, about 223, 149 ISO 14001: 2004 certificates had been issued in 159 countries (ISO, 2009 b). • The drivers : – improved public relationships and corporate image (Litkas, 1999; Vastag, 2004) – responding effectively to market demand & different institutional pressures (Jiang & Bansal, 2003). • Certified companies performed better financially? 16

ERES 2011 * EINDHOVEN ISO 14001 process • ensures the improvement of organisation environmental performance - requires periodic evaluation of compliance with environmental regulations (Jackson, 1997). • surveillance assessment every 6 months or annually and renewal assessment. 17

ERES 2011 * EINDHOVEN ISO 14001: Monitoring and renewal • guarantees organisations uphold their commitments to maintain their Environmental Management System (EMS) and also produce the environmental benefits. ” (Potoski & Prakash, 2005). • strongest impacts behavioural. – The whole process of ISO 14001 makes managers understands that environmental improvement is a never ending, not a ‘one-off’ process. But, • greatest obstacle is the high cost of implementation and lack of available resources. – including time, money, expertise for day-to-day operation and preparing for future annual recertification audit (Potoski & Prakash, 2005) 18

Forest Stewardship Council (FSC) ERES 2011 * EINDHOVEN • The only global forest certification. • Issued 1, 041 certificates covering 143, 267, 679 ha, in 81 countries. • life limited & valid for 5 years. • The FSC accredited certification body will conduct annual surveillance audits to verify the continued compliance with FSC certification requirements. • subject to unannounced checks, which may increase the attentiveness of the manager 19

The cost of Certification: a barrier? ERES 2011 * EINDHOVEN • Not cheap! 2 types of cost : – certification process (Direct) – the cost to change management to meet the FSC sustainability standard (Indirect). 20

Fairtrade Mark ERES 2011 * EINDHOVEN • 19 labelling Initiatives in 23 countries. Eg: Fairtrade Mark in UK and Ireland, Transfair in US and Canada, Max Havelaar (in seven European countries). • Fairtrade Labelling Organisation (FLO) has recently introduced a common label. • more than 27, 000 Fairtrade products sold in over 70 countries (eg: coffee, bananas and chocolates). • Successful: – consumer awareness of the Fairtrade Mark has exceeded 80% in some countries. – 15% increase in global retail value, with estimated sales amounting to € 3. 4 billion. 21

ERES 2011 * EINDHOVEN • Initially, monitoring was fairly ad hoc and was based on trust that those who registered would uphold their fair trade principles. • However, as more actors entered the systems, the Fair Trade movement began to realise the importance of a more formal monitoring system and a stricter FLO process (Raynolds, Murray, & Wilkinson, 2007). 22

Drawing from 3 successful certifications. . . ERES 2011 * EINDHOVEN hard work of establishing the certification does not end after certification is being awarded! Certification: (1) validity is life-limited (2) requires continuous monitoring and renewal assessment to ensure continuous compliances to their respective standards. 23

What can we learn from other certifications? ERES 2011 * EINDHOVEN • Rationale for monitoring & renewal – Continuous compliances Greater confidence in stakeholders – Spot checking increase robustness – Changing behaviour of owner, managers and occupiers. • Challenges – High Costs : Direct (certification ) and indirect (management etc) – Control issue: Ensuring compliances not easy as building involves several stakeholders – Data capture and management: importance of updated record, good record keeping – Requires continuous training : training for personnel focussing on their roles & responsibilities 24

ERES 2011 * EINDHOVEN Conclusion • Early certification schemes not associated with monitoring and were open ended with ‘shelf life’. • Newly established schemes have introduced renewal assessment. • Recent research: Greater reliance on green building certifications. • Learning from other certifications Monitoring & Recertification are important in providing greater assurances. • Moving forward. . . a green building certification scheme that does not include monitoring and renewal provisions may not meet the ever increasingly discerning investors! 25

ERES 2011 * EINDHOVEN Final comment to ponder What gets measured gets managed. . . and What gets measured gets better. . . • a. mohdaini@kingston. ac. uk • s. sayce@kingston. ac. uk 26