Substantive and Symbolic Certification: Technology Choices Demonstrating Social Responsibility in the Built Environment

Complex policy designs provide flexibility and discretion for impacted firms, and uncertainty in anticipated outcomes. This paper examines variance in green certification pathways for Leadership in Energy and Environmental Design (LEED), a highly customizable approach to green building. LEED is intended to promote sustainability and corporate social responsibility (CSR), or the voluntary provision of public goods. Yet flexibility often leads to variation in impact, leaving open the question of how to interpret certification. This paper examines the link between evolving motivations to certify and the environmental benefits that result from certification. I use a large, high resolution dataset on LEED certification for green buildings to examine trends in how organizations certify green.

Analysis reveals the distribution of benefits from green building among building owners and their communities. Early adopters, seeking gains from product differentiation, are shown to certify through tailored pathways that provide substantial public benefits. By contrast, late adopters avoid technical and social losses through certification pathways that increasingly rely on technology conferring private benefits. Despite many alternative expectations for how certification pathways may evolve, statistical models reveal that organizations shift toward certification pathways that use greater energy efficiency. Cost estimates indicate that the emerging preference for these technologies is not driven by technology learning or cost minimization, but may be driven by search and transaction costs, as builders mimic designs executed by peers and earlier adopters. The growing emphasis on private benefits contrasts with programmatic aims related to public benefits, in part due to the flexible program design. Observed trends suggest potential tradeoffs between flexibility and simplicity in policy design.