Yield PRO TV presents NAHB Power Hitters. Host Linda Hoffman talks with Michelle Foster, VP, Sustainability, Home Innovation Research Labs.
Transcript: NAHB Power Hitters interview. Linda Hoffman with Michelle Foster, recorded July 8, 2021
Linda Hoffman: Green is at a tipping point. Corporations, investors, and governments have signaled that they are on board, setting ambitious goals. Now comes the intersection of aspiration and market reality.
The economics is a classic one of supply and demand. Rapid growth often outstrips supply. This gins up competition and pushes up prices.
The resources required to meet the deliverables for things like solar panels, materials to produce batteries and more, are the challenge. Sources, supply chains—and the ensuing innovation found in American ingenuity—will become the larger part of the green story.
As with everything, good strategy is key to success. This includes planning, projections, and formulas that build into the needed payoff model. Today’s guest has spent a lot of time planning and mapping for this moment in the green cycle. Creating models that allow builders to capture the value of sustainability.
Michelle Foster is vice president of sustainability at Home Innovation Research Labs based in Washington, D.C.
The Lab was launched in 1964 as a subsidiary of NAHB, beginning with a small product testing facility. To say that it’s grown may be an understatement. The Lab runs product testing, third-party certification, all dedicated to home building. Also deriving directly from this decades of research is the National Green Building Standard.
Michelle, it’s great to have you on the show.
Michelle Foster: Oh, thank you so much. It’s good to be here. It’s my favorite topic to talk about. So, I’m very excited that we have the opportunity to talk today.
Linda Hoffman: Michelle, in the last year green or ESG has really fired up—Blackrock, the largest, most visible capital investor, is placing it in the news almost daily. You’ve been a proponent for a while. Why now?
Michelle Foster: You know, I think it’s just the culmination of the last decade and a half of experiences that we’ve been through. I think we’ve seen climate change, and the impacts of climate change, in where we live and where we work. I think that we have seen the escalation of different natural disasters all of the United States and in the world, in fact, that have impacted the housing and where we work. I think it’s time of a reflection because of that, to think about, what is the impact that we have on the environment and what’s our legacy going to be?
I think it was hard to really come to this recollection, to this understanding that we need to do better, and we can do better. It’s within our reach. It’s not so aspirational that we can’t achieve it, or it’s unaffordable. And, in fact, there is this really great connection between environmental goals and social goals. And we’ve seen that in the past year.
This looking at society to see how we can improve equality across all different nationalities, or individual races and ethnicities. How we can just do better. So, I think it was finally time when we said, OK, there’s a better way to do this and we need to put our money where our mouth is.
And so, we’re seeing a lot of institutional investors, really not just this year, but culminating, I think, in some of the public announcements over the past year, to say, let’s really put our money in places that can do good. We can make money by doing better.
And so why not do that? Why invest blindly? Let’s invest more wisely.
Linda Hoffman: There are many green building standards out there. LEED may be the best known. How does the National Green Building Standard fit into this mix and why is it better?
Michelle Foster: So, that’s a great question. I think there are couple of ways where the National Green Building Standard really sets itself apart from the other green building programs that are out there. But, first and foremost, it’s an ANSI standard. So, that means that it was approved as American National Standard. And everybody might ask, you know, why is that important?
Well, what’s important about that is the process that it follows. There are couple of hallmarks of being an ANSI standard. One is an open process, so that anybody in the public can participate. There can be no restriction that you have to be a member of an organization, or have some kind of special status. Anyone can participate in what the standards should look like.
There have to be lots of opportunities for public comment and enough time for people to be able to review it and to be able to comment on it. Really what it does is it follows our legislative process in a democracy, the way that we set laws. And what’s nice about that is that then as organizations, financial institutions making governments recognize the National Green Building Standard, we know that it had that open process that everybody could participate in, in its development. That’s first and foremost and most important.
The second thing is that one of the development partners is the International Code Council—they are the standard-setting body for our building codes nationwide. And so, the National Green Building Standard is one of the I-codes as designated by ICC-700. So, it’s written in code language.
One of the real barriers to builders using green building programs was that there hard to understand. It was not easy to understand how a building would be compliant. So, by being part of one of the I-codes and by being written in code language—not because it was designed to be adopted as code—it was always intended to be a voluntary bug code program.
It was far more accessible, really, to anybody on the jobsite. So, builder, developer, the insulation contractor, the HVAC installer—they could all pick up the National Green Building Standard and understand what did the particular practice mean, what was its intent and how to be complaint with that. And so, really it made it much more accessible to anybody in the industry.
The other thing that really sets it apart is unlike all of the other programs, the National Green Building Standard was specifically designed for buildings that we live in—residential use buildings. So, single-family homes, townhomes, multifamily buildings, student housing, senior housing. And these types of buildings are different from offices or institutional buildings or medical facilities. There are things that set it apart. There are things that are different, the way they’re financed and because we live in them, and so for the first time you had a National Green Building Standard that was developed for residential use buildings and only those buildings. So, it was really tailored for the places that we live in.
And then last, and probably most important what I would say is that the National Green Building Standard certification program, which is known as NGS Green, is administered by probably the most experienced, third-party certification agency, which is Home Innovation Research Labs. We’ve been doing this for 58 years, it is kind of our core competency to be independent third-party and certify a product or building’s conformance with the standard. And so, there is no one else that really has the expertise to deliver that third-party validation, that that building is actually in compliance with the code.
Linda Hoffman: That makes perfect sense for builders, by builders, in our language.
Michelle Foster: For builders, by builders, but what was equally important was there were code officials that were part of that development process, right, so they were now steeped in building science and safety issues and they required a development process. There were government officials from the U.S. Environment Protection Agency, the Department of Energy, Housing and Urban Development, there were some state agencies involved. So, their interest in having housing be better places to live were represented on those committees.
There were manufacturers who were part of that process, which is equally important because they were the companies that were bringing us better products to build these buildings better systems or seeing what the issues might be around building high-performing so that they could continue to develop products that would help those buildings be better.
So, it was really this great amalgamation of people who were steeped in the residential construction industry, but together would work on, what was the definition of a high-performance home? Let’s put out a national definition, and then four different levels that would be achievable. Bronze can be the basic level. Silver, gold and emerald can be the higher level, so that people could really, you know, use any, could work anywhere along that spectrum in building a high-performance building.
Linda Hoffman: So, it’s more of an organic an organic construct but why, specifically, would you suggest in NGBS over LEED?
Michelle Foster: So, I think there are three things that make NGBS better as a program for residential use. It is more cost-effective. It has great credibility as an ANSI standard and part of the I-codes. And it’s more rigorous. And so, I will say right away, that one of the things that I often hear people say is: well, you can’t be all those things, you can’t possibly be more flexible and cost-effective and more rigorous at the same time. And the NGBS, the consensus to me, really achieved that as a goal.
The way that they did it was that the NGBS does not have very many mandatory provisions. There are some mandatory provisions in the National Green Building Standard. They have to be done. There are no exemptions in order for building to obtain certification. But instead, it is a very expansive point-based system. And whenever, you know, the National Green Building Standard is going to apply to everything from a single-family home, to an 80-story luxury multifamily building in the city, to student housing maybe on a campus, or assisted living—and still the point-based system really allows builders and developers, architects to really pick those green building practices that made the most sense for that product.
Is this an affordable building? Is it market rate? Is this in a dry, hot climate or a wet, cold climate? Because those are different considerations that were to be put in the building. So, having that flexibility and choice really made it something that could be more practical and more pragmatic to builders and developers, and a little more affordable.
At the same time, it’s the most rigorous program. And the reason it’s the most rigorous program is that there are six different categories of green building practices. And that’s the same for all the programs. So whether you’re talking about LEED, or any of the regional programs, you know, we’re talking about energy efficiency, water efficiency, resource efficiency.
But what’s different about the National Green Building Standard is that there are minimum point requirements. You have to do a certain number of things in each of those categories to earn certification.
So, the building at the end becomes very comprehensive and green. You can’t just get all of your points, for example, in energy efficiency, by being energy efficient built. You also have to make sure that you have a relatively equal number of practices to be, to have really good indoor air quality. To have resource efficiency. To make sure that you considered the lot selection, and the lot development.
And so, it makes a very comprehensive and green. So, I think those are some of the things that set apart the NGBS from other programs that builders can choose from and which ones they use. The last thing that I’ll mention that makes it really different is that NGBS is not just a design green standard.
So, one of the things that LEED is known for—it is very design oriented. Practices, that in a way gets incorporated into the building—it’s very much something that architects use to design a building’s entire performance. And the National Green Building Standard does have components of that, energy design-based, but it also has things that are construction-based.
So, we want to make sure, for example, that what the architect designed is actually what got built. The number one thing that we hear from our verifiers is that installation doesn’t get installed correctly. It’s not any nefarious reason or intentional, you know, people are rushed, they’re trying to get the job finished. But on an NGBS green certified building, the verifier would have been there. They would have inspected every single apartment—make sure the insultation is installed correctly before the drywall goes up. And that’s becomes a difference in quality and control.
Linda Hoffman: Is there any plan, Michelle, to cooperate with U.S. Green Building Council in order to create a single national green residential building standard and certification process?
Michelle Foster: No, and honestly, I think that’s better for the industry. I think competition is good. Because competition makes us try harder and be better. Quite frankly I think a lot of NGBS’s success is that we did start after LEED. They had much better brand recognition and we did when we started. And many people, quite honestly, they believed that we would be successful because they had had a head start and had such great brand recognition. And so, really what that made us do is sort of figure out, alright, well wait a minute, why aren’t more residential buildings earning a green certification? And we started interviewing people in the industry. And what we tried to do is tackle each one of those barriers, and say, you know what, we can do better.
We can deliver a program that’s better for the builder, better for the resident, cost less money and provides more value. So again, I think that builders having a choice in programs is really better for everybody.
Linda Hoffman: Absolutely. Also, to create value is the point.
Michelle Foster: Exactly.
Linda Hoffman: How does Home Innovation Research Labs certification of building products line up with DOE’s energy Star program, and what sort of products are covered, and what product features do the two programs certify?
Michelle Foster: So, the Energy Star certification program for products is really very much geared toward energy efficiency as the name suggests. They’re really looking to see relative energy use of a particular product and how that compares to other products in its product category.
The National Green Building Standard certification, NGBS building certification of products is a little bit different. What we are doing is we are pre-approving products that would earn builders and developers points towards the building certification, if they use that product. And again, it was really an attempt to reduce the barriers that were there for using the green building certification program.
So, our product certification is very specific to the practices in the International Green Building Standard and probably will earn certification for a specific practice. So, I’ll give you a good example. There are number different practices in the National Green Building Standard where builders can get points for using products that have low VOCs. They don’t create pollution inside of the dwelling unit. So, it might be flooring choices, it could be furniture, it could be adhesives or sealants or paint. And NGS sets specific VOC levels and if that product is below that level, that would earn builder points toward certification for building if they use that product.
It’s difficult, sometimes, for builders to figure out, you know, which paint do I use, or which flooring choices that are better based on the VOC? So, what we would do is we would work with the manufacturers. They would have to present to us their independent, third-party data. So, not research that they’ve done, but they’d have to demonstrate that they went to an independent laboratory to prove that.
And then we could certify that product for meeting that practice and earning the builder points. This way, if an architect or builder or developer would like to print points for specific practice and they’re not sure what products to use, they would go to our website. They could look at the list of products, and they could see, well, if I use brand A or B, I would be able to earn points and not have to show any other documentation.
They could always choose to use another brand. The difference would be they would just have to collect that documentation to demonstrate that that product met that particular practice. So, again, it was really designed to remove those barriers to builders or developers using a green certification program.
Linda Hoffman: And builders and developers like that single point ease.
Michelle Foster: They do. And they like having less paperwork. You know, who likes paperwork? It was one of the things that we heard when we interviewed people in the industry, you know. Again, the same question. Why aren’t you getting your buildings green certified? And we heard a number of different things. And too much paperwork was been sent in a different and too much paperwork for something that we heard frequently.
Linda Hoffman: Right.
Michelle Foster: Paperwork isn’t inherently bad. But it’s good only if it provides value. Right? So, we’d rather have time and money be spent in choosing better equipment, or building the building better, than collecting a lot of paperwork that doesn’t provide a lot of value.
Linda Hoffman: I personally believe paperwork is evil. (laughter) The 2020 edition of the National Green Building Standard was recently released. What are the major changes from the previous version of the standard?
Michelle Foster: So, the 2020 NGBS is our fourth version and, by far, probably had the most changes from previous versions. There a couple of really big changes. First and foremost, it allowed us to certify mixed-use buildings that had a small amount of retail or commercial. So, as you know, many multifamily buildings that are being built today only have one or two floors of retail or commercial on the ground floor, and then apartments above. With the older versions of Standard Building Standard, we could only certify the residential portions of those buildings. And sometimes the building owners wanted to have a whole building certification. So, for the first time now, as long as the non-residential portion is 49 percent or less of the building, we can certify the whole building.
The second thing it did was recognize that the places that we live in can vary a little bit. So, for example, we have a lot of requests to start certifying assisted living facilities. And often those residents don’t have access to cooking for safety reasons. Under the previous versions of National Green Building Standard, one would have to have access to cooking facilities. So, that was a small change that allowed us to do more student housing, extended stay hotels, seniors housing with assisted living units.
Another big change was, there has always been both a performance and prescriptive path for energy efficiency, but not for water. And so, for the first time in 2020 NGBS has a performance path for water efficiency where it allows the architect working with the verifier to model what the expected water use would be at the building and compare that to a kind of reference building.
And this way it allows them to have a little more flexibility, and to be able to get to higher levels of water efficiency.
And then the last big change was that it provided a new certification path for single-family homes and townhouses and duplexes back that was a little bit more streamlined. Most of the National Green Building Standard is a point-based standard, so you have to earn a certain number of points in order to get certified. This new chapter for single-family homes and townhomes is a binary system. So, as long as you do all the practices in that chapter, you can earn certification for that house. And it makes it a little more streamlined for either the newer builder who has never used a program before, or the builder who’s building—the real high-volume builder who may be building hundreds and hundreds of houses, have dozens of models, and by the time you add in all the different things that the homebuyers can change, the features, really that would have had thousands and thousands of scoring spreadsheets to have to look at. This provides a much more streamlined approach to earn certification. So they can earn certification at the certified level. So, those are the big changes.
Some big changes from the versions before.
Linda Hoffman: So, Michelle, is the cross correlation to apartments pretty seamless or is that process different?
Michelle Foster: It’s very similar. So, there are some similarities and some differences. Homes have to be verified and inspected at least twice by an independent third-party verifier. Multifamily buildings and apartments also have to be inspected at least twice, however, they often get inspected more than twice. Because if it’s a larger multifamily building are probably putting drywall up in stages so the verifier has to make sure that they’re in every single unit once the walls are complete, before the drywall goes up, so that they can verify that that unit is compliant that particular stage and then they’ll have to go back when the building is completed.
We do certify buildings, not units, so if a building is going to earn certification that means every single unit will have to be compliant within that multifamily building. We’re not certifying an individual apartment. And that’s because we’re also looking at the common areas. So, there are a little bit of differences. We have to make sure the common areas are roughly as green and have as many green practices as the units. It might be slightly different practices that are in the units, but that they have to ultimately be roughly the same level of performances that would be in the apartments.
The other thing I would say is that we really learned a lot by asking builders and developers why they weren’t using green programs It was a really valuable experience to go to the client and say, why aren’t the programs that are out there working for you? And we heard an earful. The programs are too expensive. They’re too difficult. You need a consultant. Too much paperwork. The programs required things that the consumers didn’t value. They were too prescriptive. But the most important thing was they had to wait too long for the certificate.
And so, as we really honed our program to make it provide more value, that was something that we definitely realized, like, we can do better. We need to move at the speed of business to be selected if there’s going to be choices in green building program. So, we instituted, right away, a one business day turnaround. So, if you’re a builder, a developer, an architect, and you have a question, you need technical assistance or interpretation and you call us, we’ll get back to you within a business day.
Most of our clients have my cell phone number, my staff’s cell phone number, they have our emails. And although the program has grown so much, we really manage to try to maintain that connection with them. And to really help. We’re trying to help move the whole industry up. And that’s generated a lot of loyalty. Our clients that come in and they try our program—they tend to stay with the program.
And so, that’s something that I’ve been really proud of. And like I said, I think that if we can really work to help push the whole industry up, not recognize the top 25 percent. You’re always going to have the super achieving buildings that have all the money in the money and can do whatever they want. You want to make everybody a little bit better. And I think that’s a great thing to be able to work on.
Linda Hoffman: And doing that through customer-first. What a novel idea.
Michelle Foster: Right. It’s helped other industries and it’s certainly helped us.
Linda Hoffman: OK. Well, I’m going to wrap this up. What a great interview. Thank you so much.
Michelle Foster: Oh. My pleasure.
Linda Hoffman: Brilliance pulses through our history and fuels the greatest thought today. Michelle, it’s great to see that the spirit of innovation is alive and well, and that you are leading the charge.
Home Innovation Research Labs. Another great institution that reminds us of the ingenuity, and inventiveness and strong work ethic ingrained in America. That’s energy and genius that is relentless and contagious.
Thanks for joining us. I hope you enjoyed our show. See you on our next exciting episode of NAHB Power Hitters.