The Standards are now available for purchase and market adoption through ANSI and can be accessed by clicking here
The Capital Markets Partnership (“CMP”) completed a set of Green Building Investment Underwriting Standards for commercial and residential application. Leading investment bankers, governments, major real estate finance organizations, NGOs, and professional firms developed the Standards in CMP’s Consensus National Committee with exclusive jurisdiction for the Standard.
The Green Building Underwriting Standards (“Standards”) were unanimously approved on September 2, 2008 after a rigorous 30 Day Ballot Vote and Public Review process. CMP is an American National Standards Institute Accredited and Audited Standards Developer and the National Consensus Green Building Underwriting Standards were developed following ANSI approved protocols.
BACKGROUND
There is significant tangible financial value inherent to buildings that have achieved the US Green Building Council’s Leadership in Energy and Environmental Design® (“LEED”) certification, EPA ENERGY STAR certification, and/or Climate Neutral certification – these Standards allow for capital market recognition of that positive valuation impact relative to an asset’s conventionally constructed market cohort.
The Standards address several areas of critical focus for the real estate capital markets:
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Establishes a common definition of green building attributes appropriate for financial underwriting.
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Constructs an analytical basis focused on transparent disclosure of tangible green building characteristics important to capital market risk assessment.
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Provides a universal tool for investors to incorporate tangible risk-reduction characteristics into standard underwriting practives.
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Creates an opportunity for capital market actors to develop a comparative data set from which to perform ongoing risk assessments and analysis.
RISK REDUCTION
National consensus standards limit risk and uncertainty in investing and are particularly vital to capital market investors and rating agencies. Assets achieving ENERGY STAR, LEED and/or Climate Neutral certification can have superior relative financial value and risk profiles. This risk profile difference can be reflected in the investment and financial underwriting decision processes used by lenders, appraisers, and property/portfolio investors.
These Standards provides the real estate industry with a means to identify green building attributes along a sliding scale based on property characteristics identified by LEED, ENERGY STAR and Climate Neutral. With a reliable quantification system based on the CMP Green Value Score, the real estate industry can tangibly recognize the green building “dividend” and include it in property valuation analysis, real estate equity and debt underwriting, secondary market securitizations, and portfolio analysis.
METHODOLOGY
The CMP Green Value Score provides overall investor guidance as to an asset’s ENERGY STAR score, LEED rating, and/or Climate Neutral certification. The CMP Green Value Score is a mathematical score ranging from 0-100 based on how an asset performs on the ENERGY STAR, LEED and Climate Neutral standard.
The CMP Green Value Score is used as a compliment to existing underwriting processes and disclosures, informing primary and secondary market investors as to an asset’s or portfolio’s relative performance on financially tangible green attributes.
APPLICATION
Once calculated, the CMP Green Value Score can be used as a risk-management tool as follows:
Primary Market
Secondary Market
I. Portfolio Analysis and Disclosure
II. Corporate Information Disclosure