Centex Corp. had its cake and ate it, too, last week. The Dallas-based builder successfully persuaded shareholders that a proposal to establish goals for reducing greenhouse gas emissions from its homes would be a bad move for the company and its customers. In practically the same breath, Centex disclosed that it would install a mix of energy-saving features to all of homes it starts after January 1, 2009.
The new program is called Energy Advantage, and perhaps its most prominent feature is an energy monitor that allows homeowners to track their homes' energy consumption and carbon footprint. All of the features "are based on our research of customers' preferences and each component's proven results in efficiency savings," explains Eric Bruner, Centex's director of public relations, in an interview with BUILDER this morning. "In these economic times, our customers—many of them first-time home buyers—are especially conscious of the impacts that higher energy costs have on their costs of living. Put simply, our approach is driven by the balance between customer demand and energy efficiency that makes the best business sense. By making our homes more energy efficient, we can satisfy their needs and help the environment." Bruner adds that homes built to Centex's new standard would comply with or exceed the minimum Green Building standard for energy efficiency that the National Association of Home Builders (NAHB) has developed.
Bruner sees no incongruity between the launch of this program and the opposition by Centex's board to a proposal, offered to its shareholders by The Nathan Cummings Foundation, a New York-based philanthropy and investor. The proposal would have required Centex to adopt quantitative goals, based on available technologies, for reducing CO2 emissions in its houses and operations, and report how it planned to do that to shareholders by the end of this year. Centex officials thought the proposal would have imposed costs that made its homes too expensive, and last week its shareholders defeated the measure, although how soundly depends on one's perspective. Votes representing only 13.3 percent of the builder's 123.5 million shares of common stock supported the proposal, but that number increases to around 26 percent when one factors in that only 87.5 percent of the company's total stock was represented in person or by proxy in the voting.
"It's pretty standard for companies to oppose these kinds of proposals, but we've seen increasing support for them among shareholders," says Laura Shaffer, Nathan Cummings' director of shareholder advocacy. Her organization has previously submitted similar proposals to shareholders at other builders, with comparable results: Pulte Homes (23 percent of votes tallied in favor), Ryland Group (25.4 percent in favor), and Standard Pacific (33.7 percent in favor).
Having discussed Energy Advantage with Clayton Traylor, Centex's director of land entitlement and environmental affairs, Shaffer suggests that the biggest impact a builder can have on reducing greenhouse gas emissions "is in the operation of the homes after they are sold." So while Centex opposes the establishment of emission-reduction targets, the builder's own national program, in her estimation, might achieve results similar to what the targets would have accomplished. "I think it's significant, and it goes part of the way to addressing our concerns."
Several weeks ago, Centex ranked fourth among 13 public builders in an evaluation of the environmental sustainability of their respective construction practices. Calvert Group, a Bethesda, Md.-based investment firm that focuses on socially responsible companies, conducted that analysis. Its director of shareholder advocacy, Stu Dalheim, thinks that while Centex's shareholders may have rejected the sustainability proposal put before them, such measures continue to be "an important way for investors to signal their interest in an issue, and that management needs to take steps to address it."
Centex also briefed Dalheim about Energy Advantage, which he praises as an example of "a builder showing leadership." He is particularly impressed with Centex's commissioning the NAHB Research Center to conduct a study modeling the energy efficiency of Centex Energy Advantage-equipped homes, as well as the builder's efforts to solicit comment from its customers about the program before its launch. "I think Centex realizes that it can create the market."
Bruner adds that while Energy Advantage will soon become Centex's construction standard, "we will continue to provide the enhancements that are necessary to comply with stricter state and local regulations as necessary." Centex is also using "off-the-shelf" technology and green construction techniques at its Avignon community in Pleasanton, Calif., to build highly energy-efficient homes that include a solar electric system that provides up to 70 percent of the home's electricity needs.
John Caulfield is senior editor for BUILDER magazine.
Learn more about markets featured in this article: Dallas, TX.