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Why would an architect tell the insurance industry what to do?
Perhaps because green building and climate change are making it harder for insurers to adopt the best underwriting standards for today's buildings.
That's why the global architecture and design firm Perkins+Will has teamed up with Mike Italiano of Capital Markets Partnership (CMP) and the Institute for Market Transformation to Sustainability (IMTS) to amend the underwriting standards that consider sustainability, resiliency, and the risks we all face today with natural disasters and social stresses.
Along with IMTS and the nonprofit coalition Capital Markets Partnership, Perkins+Will has helped draft a new consensus-based amendment to the Green Building Underwriting Standards 2.2 which addresses: climate change; natural disasters; social stresses; promotion of sustainability and ecological well-being; and long-term resiliency.
The standards focus on three levels of information: holistic planning, acute events, and chronic events. Holistic planning emphasizes an integrated process. Acute events describe the immediate response that comes from a major event such as a tornado or earthquake, while chronic events relate to longer-term issues such as rising sea levels or falling fresh-water reserves.
"Unlike anything seen before in terms of its comprehensiveness and value, the new amendment will provide guidance that in turn may help to reduce legal, technical, and other risks in real estate investments," according to Janice Barnes, Ph.D, principal, and global discipline leader for Planning + Strategies with Perkins+Will. "For the building industry, consensus standards offer very high value by substantially reducing uncertainty and risk."
Similar underwriting standards have been used to regulate the U.S. insurance sector since the late 19th century.
The chief author of the standard, Perkins+Will's Doug Pierce, notes the importance of maintaining a systems perspective when considering resiliency. "Small measures won’t do, as resilience relies on the integration of systems that are physical, economic, and social," he says.
With underwriting standards for green, resilient buildings, owners and investors may be able to obtain favorable financing, quantify and "sell the value" of a highly resilient, green building over a standard building design, and also measure the worth of properties and portfolios that include greener, more resilient facilities.
Capital Markets Partnership (CMP) is a nonprofit coalition of banks, investors, governments, and countries that implements sustainable investment products based on green building and manufacturing consensus standards. CMP includes officers from Perkins+Will, GE, Eaton, Impact Infrastructure, H Brownstone, and Deloitte.
