Social Capital

  • Human Rights & Community Relations
  • Customer Privacy
  • Data Security
  • Access & Affordability
  • Product Quality & Safety
  • Customer Welfare
  • Selling Practices & Product Labeling

Business Model & Innovation

Leadership & Governance

  • Business Ethics
  • Competitive Behavior
  • Management of the Legal & Regulatory Environment
  • Critical Incident Risk Management
  • Systemic Risk Management
General Issue Category
(industry agnostic)

Disclosure Topics (industry specific) for:
Home Builders

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Ecological Impacts

Land Use & Ecological Impacts

Home builders face challenges directly related to the ecological impacts of development activities. Developments often take place on previously undeveloped land, and companies must manage the ecosystem disruption of construction activities as well as the regulations and permitting processes that accompany “greenfield” land development. Regardless of the siting decisions companies make, industry development activities generally carry risks related to land and water contamination, mismanagement of waste, and excessive strain on water resources during the construction and use phases. Violation of environmental regulations can result in costly fines and delays that decrease financial returns while potentially harming reputations. Companies with repeated violations or track records of prior activities with excessive ecological impacts may find it difficult to receive approval from local communities for new developments, thereby decreasing future revenue and market share. Companies that concentrate development efforts in water-stressed regions may see further challenges to permitting approvals, and also face risks related to land or home depreciation due to water shortage concerns. Environmental quality control procedures, “smart growth” strategies (including a focus on redevelopment sites), and conservation strategies may help ensure compliance with environmental laws, and therefore mitigate financial risks, while improving future growth opportunities.

Employee Health & Safety

Workforce Health & Safety

Home construction requires a significant amount of manual labor from company employees and subcontractors. Site excavation and home construction activities are physically demanding, exposing workers to risks from falls and heavy machinery, and resulting in relatively high injury and fatality rates. Worker injuries and fatalities have internal and external costs that can significantly impact the results of their operations and their social license to operate. Impacts include fines, penalties, workers' compensation costs, regulatory compliance costs from more stringent oversight, higher insurance premiums, and project delays and downtime. To avoid such costs, companies can foster a culture of safety by developing proactive safety management plans, training employees and contractors, and conducting regular audits.

Product Design & Lifecycle Management

Design for Resource Efficiency

Residential buildings, when occupied, consume significant amounts of energy and water. Companies in the Home Builders industry can improve the resource efficiency of homes over their lifecycle through sustainable design practices and choice of materials. Energy-saving products and techniques such as designing homes for efficient heating and cooling can help to reduce dependence on energy, whether it comes from the electric grid or onsite fuel combustion. These measures, which are intended to improve the resource efficiency of homes, can decrease the costs of home ownership through lower utility bills. Water saving features such as low-flow faucets alleviate strain on local communities, while likely also lowering costs. Homebuyer awareness of the importance of the energy and water efficiency creates a potential for companies to increase demand in their target market, thereby increasing revenue and/or margins. Effectively applying resource efficiency design principles in a cost-effective manner may serve as a competitive advantage, especially when companies are successful in systematically educating customers on the long-term benefits of these homes.

Community Impacts of New Developments

Community and urban planning gives home builders the opportunity to thoughtfully design new residential developments in a way that benefits their customers as well as the pre-existing surrounding community. New home development can bring economic growth and workforce opportunities while moderating cost-of-living increases, and can provide communities with safe and vibrant neighborhoods. Companies may strive to improve communities’ environmental and social impacts by providing access to public transportation and/or not overburdening existing transportation or utilities infrastructure, providing access to green spaces, developing mixed-use spaces, and creating more walkable communities. These strategies can help increase the overall demand for and selling prices of homes as well as reduce the risks related to permitting and community or stakeholder opposition related to current or future developments. When companies use development strategies that inadequately integrate their new communities into the pre-existing surrounding communities, they risk insufficient sales prices, excessive costs related to infrastructure needs and assessments, and risk being permitting approvals, delays, and/or community support for future developments.

Business Model Resilience

Climate Change Adaptation

The impacts of climate change, including extreme weather events and changing climate patterns, may impact the markets companies select to develop homes and residential communities. Companies with business models that incorporate ongoing assessments of climate change risks, and adapt to such risks, are likely to more effectively grow company value over the long term, partially through reductions in risk. More specifically, strategies focused on home development activities in floodplains and coastal regions that are exposed to extreme weather events, such as flooding, have increased needs for their business models to adapt to climate change, especially considering long-term challenges like flood insurance rates, the financial stability of government-subsidized flood insurance programs, permitting approvals, and financing stipulations. Rising climate risks and the increasing cost of occupying properties in volatile regions may translate into reduced long-term demand, land value depreciation, and concerns over understated long-term costs of home ownership. Additionally, companies that build developments in water-stressed regions risk losing land value and may face problems with permitting approvals. The active assessment of climate change risks and a holistic view of long-term homebuyer demand may enable companies to successfully adapt to such risks.

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