A Compelling Model of Market Transformation

by Christine Ervin

After observing market reaction to the U.S. Green Building Councils (USGBC) Leadership in Energy and Environmental Design (LEED) program for several years now, Ive reached a strong conclusion. LEED is the most powerful voluntary market transformation tool Ive encountered in the environmental arena. That conclusion is informed partly by years of experience in private-public technology ventures ranging from specific technologies, such as fuel cells and photovoltaics, to environmental labeling programs and industry-wide R&D initiatives. And it is suggested by a combination of quantitative indicators (e.g., rates of market penetration, growth in media coverage and membership growth) as well as a more subjective read of the market buzz surrounding LEED.

LEED is not only entering a very diverse array of markets, but stimulating changes in product design, professional practices and educational curricula. It is also prompting debate in various circlesanother healthy sign of market transformation. Its important to understand this phenomenon. Underlying factors will be useful in shaping the future of LEED and could also be instructive for applications elsewhere. Five principles are most relevant.

Market Driven
LEEDs design and philosophy is rooted in a street-smart balancing of the latest technologies and practices with what can really work in todays market. Critical to that calculation are the perspectives from the Councils diverse membership from across the building industry.

Rewards Competition
The tiered certification structure is clever. The Certified, Silver, Gold and Platinum awards offer a mechanism for reaching more of the mainstream market at one end coupled with stretch goals at the upper end. It also draws upon an innate spirit of competition to inspire goal-setting and performance.

Flexibility over Prescription
While prescriptive paths have their place, LEED stimulates creativity by giving building teams as much flexibility as possible in selecting credits and strategies. Innovation credits provide an additional mechanism for capturing emerging or unanticipated strategies to seed future versions of LEED. (If desired, local jurisdictions can add prescriptions on top of the LEED structure so long as they administer those requirements.)

Consensus-focused
Consensus-based decision-making remains a touchstone value for the Council. Our balloting policy reflects a careful balancing of streamlined decision making with all the key ingredients necessary for reaching outcomes satisfactory to the majority of our members. The Council also welcomes input from all interested stakeholders regardless of membership status.

Third-Party Verification
Independent review and certification of LEED compliance is the key to minimizing confusion in the marketplace and protecting the credibility of LEED and the investments of building owners in green projects. A well-recognized and respected brand provides leverage for maximum market impact.

These same principles must shape our responses to challenges that inevitably arise in rapidly emerging markets. Some challenges are simply growth-related. Its one thing to employ consensus decision-making when you have 250 voting members as the USGBC did several years ago. It is quite another when the voting body is 3,000-strong and growing by some 140 new members each month. Add to that the fact LEED is designed to evolve rather rapidly to reflect best practices of the top 25 percent of the market and it compels us to search for decision-making processes that are both nimble yet reflecting member and stakeholder feedback.

Were also building delivery systems to support rapidly expanding certification needs. In the first six months of 2002, five projects were ready to submit final documentation materials. In the same six months of 2003, 20 projects have submitteda trend that will only increase as new products, such as LEED for Existing Buildings, enter the market.

Some challenges reflect market experience with LEED products. When customers signaled frustration with overly burdensome documentation requirements last year, the Council responded with the LEED Version 2.1 update, which offers streamlined forms and processes. When members expressed the need for tools to help convey the benefits and costs on green buildings to clients, we worked with a top-class business team to produce the popular Making the Business Case brochure.

More data and research are still needed, however, to establish solid benchmarks on costs, benefits, and the relationship between various design features and results. We made this one of our top recommendations to Congress this year and are now partnering with others to expand both data and communication tools. As a further stimulus, we are even considering an innovation credit in the LEED system for selected cost/return information.

Recently, weve been receiving reports of market confusion over the prices being quoted for LEED-related services. In some cases, quotes for identical services vary widely not so unexpected in a new market and a healthy part of market competition. But some quotes also blend estimates for energy modeling, commissioning and other related services under the heading of LEED certification services. In response, the Council plans to issue ranges drawn from actual case studies of successful projects to help inform market choices.

Still other challenges reflect LEEDs role as a catalyst. More and more product manufacturers, for example, are interested in marketing their products relevance to LEED credits. Some claims are accurate; others not. But the demand itself suggests an expanding need for life cycle assessments and related services. This, in turn, will allow evolution of the technical standards imbedded in LEED itself.

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