RESNET® HERS® Ratings are increasingly becoming the metric for Environmental, Social, and Governance (ESG) reporting on the energy performance of homes. ESG has become an integral factor in the financial world. The Structured Finance Association estimates that $11.6 trillion, or $1 of every $4 invested in the United States, was invested under ESG investment strategies. The National Bureau of Economic Research reported that investors are, “willing to pay 20 basis points more in annual fees for sustainable funds.” This movement provides exciting opportunities for RESNET® and the HERS® industry. The largest home builders are reporting their HERS® Index Scores to their stockholders and investors. The HERS® Index Score is recognized by the Sustainable Accounting Standards Board (SASB) as a metric for home builders reporting on the energy performance of the homes they build. Fannie Mae and Freddie Mac are offering mortgage incentives for homes that are HERS® rated and appear in the RESNET® National Registry. This activity will continue to grow in importance as the Federal Securities Exchange Commission tightens the rules on ESG claims and requires more robust accounting. In addition to this opportunity, there is an emerging market force of Build-To-Rent where developers arrange with builders to construct single-family homes as rental property. It was recently announced that the rental investor Pretium entered a $1.5 billion deal for Build-To-Rent homes from D.R. Horton. For more information on this development go to Pretium DR Horton Build to Rent Deal One of the nation’s largest Build-To-Rent developers AMH has all their homes HERS®-rated. The company reported that in 2022, that their average HERS® score was 61.9 among their 2,183 newly built homes. AMH has produced a short video on their HERS® Index commitment, AMH HERS Scores To better track these emerging opportunities and to develop recommendations on how RESNET® should position itself to take advantage of them, RESNET® Executive Director Steve Baden has appointed a RESNET ESG Advisory Group. The group is composed of a select group of rating companies and builder representatives that are active in this area of the industry. Matthew Cooper of PEG chairs the advisory group. The members of the group are: Jacob Atalla, KB Home Erin Bordelon, D.R. Horton Thomas Cochran, ARCXIS Ian Hughes, Meritage Homes Eric Johnson, US Eco-Logic Nathan Kahre, EnergyLogic Chris Urbanus, Burgess Construction Consultants, Inc. The initial efforts of the task group will be targeted on increasing the presence of RESNET® and HERS® Ratings to financers investing in this economic activity.
