How Would LEED v4 Impact Business?
What is the life cycle environmental impact of your product? Where and how do you get your raw materials? What is in your product, and is any of it hazardous?
These may seem like reasonable questions to the average sustainability professional, but few manufacturers like to consider a future in which answering these questions publicly is a basic requirement of market entry.
But this dream or nightmare scenario will become a reality in the upcoming era of LEED v4.
The membership of the U.S Green Building Council recently approved major changes to the LEED rating system, now known as LEED v4, including a significant overhaul of the materials and resources credits. As a building products manufacturer, it is our business to keep track of changes in the green building certification world, but why should anyone outside the building industry care about LEED v4?
In short, the changes to LEED, the world’s dominant green building standard, with more than 2 billion square feet of certified commercial space, are so dramatic that they will send ripples into other industries and shift expectations on sustainability reporting and performance far beyond the building industry.
LEED v4’s materials and resources credits are likely to accelerate four existing sustainable business trends by creating a global incentive for firms to make their products meet the complex and demanding new transparency and performance requirements. As ever in LEED, these credits are optional, but products that contribute to more of the six new LEED points possible are more likely to gain favor with building designers and owners.
1. Harnessing the power of transparency
For the first time, a building product can contribute to a LEED point just by disclosing information related to environmental and health impacts.
Yes, this means that even if your product contains carcinogens and has a King Kong-sized carbon footprint, it theoretically could contribute to two LEED points just by being transparent about these unfortunate facts.
This has created controversy in some quarters, which led to the addition of matching “optimization” or performance-related credits. We have and will continue to argue that transparency drives improvement for business in a way that static performance requirements such as “minimum 30 percent recycled content” or “No Red List Chemicals” do not. So even if a building designer never reads the detailed product disclosures submitted for a LEED v4 project, manufacturers know what they disclosed. This knowledge starts the internal inquiry into how questionable processes or materials could be improved before the next disclosure.
We can only imagine a similar phenomenon occurred when the FDA first started requiring trans-fats to be disclosed on the Nutrition Facts Label. How many food companies reformulated products knowing this transparency mandate was coming? You could argue that it created more change faster, while creating less resistance from a powerful business lobby than banning trans-fats outright.
2. Using LCA as a product differentiator
Earlier versions of LEED have relied on single-attribute proxies, such as recycled, reused or bio-based content for identifying building materials with reduced environment impacts. LEED v4 is pioneering the use of verified life cycle assessment (LCA) data in an attempt to more holistically assess environmental impacts across the entire life cycle of a product. A new credit asks manufacturers to provide Environmental Product Declarations (EPDs) or third-party verified life cycle assessments.
Just having an EPD contributes to one point, while showing that your product’s impacts are below industry averages contributes to a second point. Recycled content still will contribute, but only to the credit for responsibly sourced raw materials.
Since LEED v4 was approved this summer, firms that verify LCA data report a flood of new customers that want to produce EPDs. For the first time, businesses see a real possibility of LCA becoming a market differentiator or a baseline requirement to compete in a high-profile market.
3. Responsible sourcing of (all) raw materials
For those familiar with chain-of-custody requirements for certified wood or conflict minerals reporting, the new credit for raw materials sourcing will seem familiar.
The credit requires manufacturers to report extraction locations and supplier commitments to responsible practices for 90 percent of a product’s raw materials. It will be interesting to see how manufacturers handle this one, given that supply chain information, when available, can be seen as strategic and highly confidential. It is probably safe to say that this credit will drive many interesting conversations, including with raw materials suppliers traditionally spared the scrutiny afforded to the most controversial materials.
High-profile problems in the food, electronics and apparel industries have made companies scramble to influence their complex supply chains. LEED v4 aspires to reward companies who have these conversations with suppliers before there is a problem.
4. Hazard-based ingredients reporting
The void created by the absence of meaningful federal chemical regulatory policy once again is being filled by NGOs and leading businesses. LEED v4 marks USGBC’s first major move into addressing the potential toxicity of building product ingredients.
Products can contribute to one point by declaring all ingredients more than 0.1 percent by weight, and another point if companies can prove that they are avoiding some of the most hazardous chemicals as determined by several governmental lists.
Industry associations are up in arms about this approach, which makes judgments based on the inherent toxicity of ingredients rather than any proven risk of chemical exposure based on how they are used in products. Unfortunately, the current reality is that government and industry experts on risk assessment have not adequately addressed rising public demand for credible data on the human health impacts of common chemicals and ingredients, especially outside of food and cosmetics.
In this void, NGOs, corporations such as Google, and dozens of architecture firms have banded together to create the Health Product Declaration, a hazard-based standard format for reporting ingredients and health warnings, which is recognized by LEED v4. In what may be a case of too little, too late, one industry association has just responded by putting out its own format, the Product Transparency Declaration, which curtails the reporting of chemical hazard warnings in favor of providing basic information on exposure risks to users.
It is too early to say, but the new LEED credit, combined with Wal-Mart’s recent announcement on chemical disclosure and avoidance, could mark a turning point in making hazard-based chemical assessment, rather than the more complex risk-based assessment, the de facto method for weighing the “healthiness” of product ingredients.
The new normal
Do you remember when it was acceptable to only report greenhouse gas emissions you produced directly through your fuel or electricity use? Or when you could claim you weren’t responsible for the actions of your second- and third-tier suppliers? Or when it was possible to distinguish a product as “healthy” simply by declaring what substances weren’t in it?
The days of hiding behind cop-outs such as “Scope 3 emissions,” “independent suppliers” and “BPA-free” are ending. The new credits in LEED v4 are just the latest sign that yesterday’s brand of corporate responsibility is no longer sufficient in the age of transparency and global supply chain accountability.
Figuring out how to best implement more holistic sustainability reporting is a work in progress, but we see life cycle assessment, chemical hazard assessment and supply chain transparency as part of the new normal for manufacturers in every sector.
The final question for companies everywhere remains: Will you contribute proactively to making new tools such as LEED v4 work for business, or will you simply react as these trends move into your sector?