KB Home Chairman

Sustainability Is in Our Nature Letter from KB Home Chairman, President and Chief Executive Officer, Jeffrey Mezger

Each year, this report provides an opportunity to reflect on what we have accomplished, how we got here, where we are headed, and—most importantly—why we do this. Since we built our first ENERGY STAR® new home in 2000, our sustainability journey has progressed from an isolated test case to an integral part of our business that is reflected in how we operate and in the homes we build. In short, sustainability is deeply embedded in our company culture.

How we got here is simple, although not easy: a genuine dedication to our homebuyers’ dreams, combined with the rigorous operational discipline and innovation to deliver them. In 2007, at a time when other builders were cautious, we saw an opportunity to take a strong step forward. We felt we could take “green homes” beyond being a luxury product for a privileged few, and instead offer high-performance and environmentally thoughtful homes to the wider homebuying market, from our core first-time buyers through empty nesters moving down. We could get rid of waste in our operations and not only support the environment, but also reduce our cost to build and make homeownership more attainable. Consumers could have both a sustainable home built for the future and a competitively priced home built to live beautifully today. In 2017, I am proud to say that we delivered that dream to nearly 11,000 homebuyers across the country.

Sustainability has become the foundation for how we operate; however, our approach is continuously evolving. Today, we take a broad view that embraces environmental sustainability as well as an increasing focus on social and economic sustainability. We believe we are in the business of building communities, not just houses. For us, being a sustainable company means more than building an energy-efficient product—it means creating a business that works to make a positive contribution to the various social, economic and geographic communities it serves.

In this report, we present our consistent, long-term sustainability goals and our 2017 progress toward them, identifying our accomplishments as well as specific areas where we believe we have room to improve. We are proud of our results this year:

  • We attained an average national HERS® energy performance score of 57, an improvement of 33% since we began tracking in 2007. For the fourth year in a row, we were recognized for our exceptional HERS scores by receiving the RESNET® President’s Award for the American Production Builder with the highest percentage of homes rated with a HERS score under 54.
  • We achieved a national record for building the most WaterSense® and Water Smart homes on a cumulative basis, and reached the milestone of installing nearly 500,000 WaterSense labeled fixtures. For this, we remain the only national builder to be recognized with U.S. Environmental Protection Agency (EPA) WaterSense Sustained Excellence Award for three consecutive years.
  • We expanded our participation in EPA's Indoor airPLUS program by opening San Diego’s first Indoor airPLUS community. We were the first and remain the only national builder to receive EPA’s Indoor airPLUS Leader award in recognition for building homes to this rigorous standard for healthier indoor environments.
  • We continued our collaboration with RESNET on the important effort to create a national water-efficiency rating system, HERSH2O, to provide a consistent standard for measuring and comparing a home’s water consumption performance.
  • We engaged with consumers and the broader public in a series of educational events on energy efficiency across the country to mark the milestone delivery of our 100,000th ENERGY STAR certified new home.
  • We continued to make the incremental enhancements to our home designs and operational processes that have added up to meaningful change over the last decade.

In 2018, we expect to reach our long-standing goal of an average national HERS score of 55, demonstrating our dedication to continuously increasing the energy performance of our homes. We are also taking important steps to reach zero landfill waste in our operations by 2025, based on the target we announced in 2017—the first large-production homebuilder to announce such a goal. In addition, we will be propelling our health-focused and technology innovations forward with our next-generation KB ProjeKt® concept home of the future, which will be featured at the International Builders’ Show™ in February 2019. We will also continue to partner with leading brands on new product introductions, including smart-home technologies.

As we look to the future, we do so with leadership and a consistency of purpose made possible with our greatest asset: our talented KB Home team members, who are dedicated to making sustainability an essential part of our nature. Utilizing our energy and operational strengths, we are translating our principles into action and constantly working to have a meaningful, positive impact on our homebuyers, our employees, our stockholders and the communities we serve.

Thank you for being part of our journey.

Jeffrey T. Mezger