Why certify: Uncovering the true value of building certifications

Our industry is engaged in an important dialogue to improve sustainability through ESG transparency and industry collaboration. This article is a contribution to this larger conversation and does not necessarily reflect GRESB’s position.

Building certifications have long been a tool used to quantify building performance through the development and operations life cycle, offering many meaningful strategies to employ in the interest of greening real estate portfolios, advancing ESG initiatives, and enhancing GRESB performance. As new certifications enter the market and existing certifications adapt and evolve, navigating the best certification(s) to support your ESG and sustainability strategy can be difficult.

Developers and operators may find themselves asking: why certify? And more specifically, if we are already taking a comprehensive approach to increasing building performance across multiple GRESB building performance categories, what value does the additional cost and administrative effort of certification represent? As sustainable real estate continues to coalesce around themes of decarbonization, it may begin to feel like realized embodied and operational carbon reductions outweigh the other benefits of a holistic sustainable building certification. But these two things do not have to be in tension.

This article answers these questions while reestablishing the case for certification, the strengths of certification tools, and how such tools continue to be effective in building comprehensive sustainability strategies across real estate portfolios.

We will start with a snapshot of the landscape of current certifications. As demand for regional-specific third-party verification of building performance has increased, the industry has been flooded with certification tools, all with a similar intent of quantifying sustainability performance across multiple impact categories, but with varying levels of rigor and customization for typology. GRESB currently recognizes an exhaustive list of certifications, but recently launched a new public consultation on building certifications to refine its building certifications criteria. Indeed, while having options may benefit end users, this might leave one to wonder where to start and which certification might best support impact in line with corporate goals. While increased valuations, rent rates, and employee retention have proven the value-add of certifications, building performance data shows that certified buildings do not always perform better than non-certified buildings.

Now we will reframe what certifications are and how we can use them to support decarbonization goals, GRESB performance, occupant-centric spaces, and ongoing building performance.

Certifications:

1. Provide established frameworks to guide the development of holistic sustainability strategies and quantify performance
2. Integrate accountability via third-party verification
3. Normalize performance across typologies
4. Temper the potential for greenwashing that comes with self-reporting and ad hoc/DIY sustainability strategy

This is not to say that certifications are immune from manipulation. However, the layers of accountability typically function as intended and spur meaningful action.

Certifications can appear to fall short in two main ways, both manifestations of the fundamental misunderstanding of what certifications are and how to use them effectively:

1. New construction certifications do not verify operational performance. These certifications do not certify anything related to the operational phase of the building. They certify that a building has the potential to realize high performance when operated as designed. Hence, the operations phase is needed to build performance tracking, monitoring-based commissioning, and recertifications.
2. Point-in-time (new construction) certifications are not the be-all and end-all for impactful real estate. In line with the above, once owners, developers, and project teams navigate the rigorous steps of certification over the course of a two- to four-year design and construction phase, we tend to want to celebrate this accomplishment and broadcast the significance of our years of work with notes of “best in class,” “first of its kind,” and “the most sustainable.” However, none of these claims can be validated until at least 12 months of data has been produced from a fully occupied building, overstating and diluting the significance of certification.

In that case, why should anyone embark on the process of certifying their project or portfolio?

We come back to what certifications are and their strengths. They intend to provide actionable frameworks to leverage and realize meaningful impact, which is then quantified and showcased by the certification. Certifications are very good at doing this when certification strategy is led by impact. Put another way, certification frameworks are tools that we leverage for impact. The certification is the result of that meaningful work. A certification is only as good as the real impact that it represents.

Once we are confident in the premise that certification work is a meaningful sustainability exercise per se, there is a waterfall of secondary benefits specific to decarbonization strategy, GRESB, productivity, retention, asset valuations, and, if done right, operational costs.

Decarbonization

Many certifications provide a clear framework for decarbonization strategy. LEED, for example, has a plug-and-play decarbonization strategy built into the rating system. The combination of Optimize Energy Performance, Renewable Energy, Building Life-Cycle Impact Reduction (embodied carbon), and Electric Vehicles credits, coupled with Advanced Metering and Enhanced Commissioning (especially Monitoring-based Commissioning), is an out-of-the-box decarbonization strategy that, if done well, can yield buildings that reflect decarbonization principles and are ready to realize decarbonization goals during operations. ILFI’s Zero Energy and Zero Carbon certifications are streamlined certifications that focus solely on decarbonization and support similar outcomes, capturing design and construction phase decarbonization strategy as well as real performance during the first year of operations.

GRESB

At the corporate level, there are many frameworks and reporting bodies that investors, customers, and stakeholders utilize to verify that a company’s overall strategy includes responsible investment, sustainability, and ESG factors. These groups often look to certifications as the metric or tool to gauge sustainability at the asset level.

GRESB has shifted focus to asset-level performance, with 70 percent of the GRESB Score in the Real Estate Assessment coming from the Performance Component and making impactful improvements at the building level. Certifications currently represent 15 percent of the Performance Component of the GRESB Score and 10.5 percent of the overall GRESB Score (only taking into account being awarded the certification). Entities will likely earn many more points in categories such as Risk Assessment, Tenants and Community, Energy, Water, Waste, and GHG (greenhouse gas emissions) from implementing strategies within each certification framework.

It is important to note that the GRESB Foundation recently launched a public consultation on building certifications aiming to refine building certification evaluation criteria.

Healthy buildings

The increased productivity and retention rates realized by certified buildings are largely the result of successful healthy building strategies. In the same way that certifications provide a foundation for a decarbonization strategy, they do the same for healthy buildings. WELL, Fitwel, and LEED all provide clear and comprehensive frameworks for healthy building strategy. Without the framework and rigor these certifications require, important measures like acoustics, lighting quality, daylighting, active design, and wellness strategy are often addressed piecemeal or not addressed at all.

Performance during operations

New construction certifications help us design and build real estate ready to realize high performance during operations. Existing building certifications and recertifications provide frameworks for quantifying high performance during a building’s life cycle. Regardless of whether an asset has a design and construction-based certification, existing building certifications are some of the best tools to quantify performance during operations and track progress toward decarbonization goals. Knowing that we cannot manage or improve what we cannot measure, the ongoing performance tracking and continuous improvement required by existing building certifications and the accountability that comes with them are critical to realizing impact and progress toward decarbonization and enhanced performance.

We get it. In the race to achieve decarbonization targets and ESG goals, developers and operators may not have ample time to sort through the sea of available certifications to pursue in alignment with their goals. However, despite common misconceptions, building certifications offer invaluable frameworks that can result in transformative impact when leveraged effectively, and an avenue to showcase verified accomplishments. Certifications can go hand-in-hand with meeting performance goals, proving a valuable investment for those who boldly answer: “why certify?”

This article was written by Steve Loppnow, Senior Director of Certifications at Stok and Kelly Hagarty, Director of ESG at Stok.

References

Allen, Joseph G. and John D. Macomber. Healthy Buildings. Cambridge, MA: Harvard University Press, 2020.

CBRE. “Green Is Good: The Enduring Rent Premium of LEED-Certified U.S. Office Buildings,” CBRE Insights: Viewpoints (blog), October 22, 2022.

“Fitwel.” Fitwel. Accessed March 29, 2024.

“LEED rating system.” US Green Building Council. Accessed March 29, 2024.

“The Financial Case for High-Performance Buildings.” Stok. Accessed March 29, 2024.

“WELL Certification: The healthy building difference.” International WELL Buliding Institute. Accessed March 29, 2024.

“Zero Carbon Certification.” ILFI. Accessed March 29, 2024.

“Zero Energy Certification.” ILFI. Accessed March 29, 2024.