KB Home : 2021 KB Home Sustainability Report as single pages

Letter from KB Home Chairman, President and Chief Executive Officer, Jeffrey Mezger

I am honored to lead one of the oldest and largest homebuilders in the United States, whose legacy is built on strong relationships and leading customer satisfaction. For 65 years, KB Home has pioneered new approaches to building homes, evolved our home designs to reflect contemporary living, and created vibrant, enduring communities. We have helped generations of American families achieve their dreams of homeownership - many for the first time.

We aspire to be the most customer-obsessed homebuilder in the world. Our consistent, rigorous focus on understanding homebuyers' needs and desires helps us to deliver a compelling, personalized product and an exceptional homebuying experience to every customer, every day. We are proud that our customers' trust in us has made KB Home the #1 Customer- Ranked National Homebuilder in third-party customer surveys.

Over 15 years ago, we decided to make a customer- driven, industry-first commitment to sustainability paired with affordability. Even then, we believed that sustainability could go far beyond building what many called "green homes." It could deepen the relationships on which our success has always been based by building innovative homes for our customers and our planet, homes that have healthier indoor air environments and are more efficient, now and into the future. Building welcoming communities that enable people to put down the roots that sustain their social bonds and can help them with generating wealth over time. And building a stronger corporate future by implementing rigorous governance through integrity, purpose and an inclusive culture, shaping a resilient company that can deliver long-term value.

We took this path because we believe that what we do matters. It matters to our homeowners and their families, who make their lives in the homes and communities we build, as well as to the local governments who look to us to help them meet their housing needs. It matters to our employees, who find meaningful work in a safe and supportive workplace, and to our suppliers and trade partners, who share our drive for sustained excellence. And it also matters to all of us who believe in the power of business to do well while doing good.

Both today and for the future, knowing what matters guides our actions and produces meaningful results.

We build better homes that we believe can help reduce climate change and protect the world we all share

We have made sustainability the foundational lens for our operations. Our energy- and water- efficient new homes are designed to reduce the total cost of homeownership while also reducing their environmental footprints. Since 2000, we have built more than 160,000 high-performance ENERGY STAR® certified homes and delivered more than 14,000 solar homes, cumulatively saving our homeowners an estimated $856 million in utility bills and reducing greenhouse gas (GHG) emissions by an estimated 6.3 billion pounds while offering features that promote healthier indoor air environments. And I'm pleased to share that our focus on sustainability has made us the #1 energy- efficient national homebuilder with the lowest publicly reported home energy rating score among large production home builders.

We create better communities that help expand the American dream for all of us We aim to give our customers the ability to purchase a new home that reflects what they value and how they want to live, at a price they can afford. Homeownership is one of the ways Americans of every background can potentially build household wealth. It also helps create stable communities where strong social connections thrive. In 2021, we helped 13,472 homebuyers achieve the American dream - 62% of them were first-time homebuyers who placed their trust in KB Home to help them make this significant investment in their futures. We also create meaningful change through KB Cares, our philanthropic program, helping thousands of Americans and contributing to local communities across the country.

We strive for a better future that creates value for all stakeholders by operating with integrity and purpose

We continually strive to build a more sustainable company, committed to operational excellence produced through a respectful, team-focused workplace and strong governance standards and practices. And our approach has been recognized. We're humbled to have been named to Newsweek®'s 2022 list of America's Most Trusted Companies and recognized on its Most Responsible Companies list, the only national builder to receive this distinction for two consecutive years.

We've distinguished ourselves as an employer, too. In 2021, The Wall Street Journal® and the Drucker Institute named us to their Management Top 250 list of the most effectively managed companies in the country, and we've been recognized among the "World's Most Admired Companies" on Fortune®'s 2022 list. Forbes® also named us as one of America's Best Midsize Employers for the second consecutive year, placing us in the top 10% of the 500 companies ranked for 2022.

It is gratifying to earn such acclaim, but it's even better to know that we attained this recognition by putting our customers first. We continue to be motivated by the privilege of building our customers' dreams and placing the great American aspiration of homeownership in reach for families across our nation.

Looking forward, we intend to continue our journey by applying innovation toward a more sustainable future. As we have over the past 15 years - even in the midst of a continuing pandemic - we plan to progressively incorporate high-efficiency, cost- effective technologies into our homes. We cannot do this alone; we are leveraging our long-term, collaborative relationships with our suppliers to help design and adopt emerging innovations. We are also taking an equally important step in our sustainability evolution: acting as a catalyst within our value chain to minimize embodied carbon in the materials used to construct our homes.

This is our 15th Annual Sustainability Report, the longest-running publication of its kind in the homebuilding industry. In the pages that follow, we share our pursuit of better homes, better communities and a better future. Most importantly, we share our focus on building enduring relationships and why it matters, to our customers, to our business, to our employees and the environment we all share.

I invite you to join us on our journey today and into the future.

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Report Purpose and Structure

This is our 15th Annual Sustainability Report, which follows our most recent report published on Earth Day in April 2021. In this report, we discuss our accomplishments in 2021 and our priorities moving forward. In addition, with this report, we seek to foster continued discussion and engagement with all of our stakeholders on the complex issues surrounding sustainability and broader environmental, social and governance (ESG) practices for long-term value creation.

All information provided in this report is for our fiscal year ended

November 30, 2021, unless otherwise noted. Inquiries regarding our sustainability initiatives can be directed [e-mail].

Reporting Standards

We believe transparency and accountability are important elements of sustainability reporting. Our reporting herein and elsewhere is aligned with the SASB, TCFD, GRI and UN Sustainable Development Goals (SDG) frameworks, providing data consistency and decision-useful information.

Indices for both SASB and GRI can be found in the Stakeholder Transparency & Data Tables section of this report, as well as a chart that demonstrates alignment between select UN SDGs and our policies and strategies.

Advisory Note

Certain matters discussed in this report, including any statements that are predictive in nature or concern future performance, or our future initiatives or actions and their expected results, are forward-looking statements and/or reflect aspirational goals. These statements are based on current expectations, hopes and projections about future events and are not guarantees of future performance. We do not have a specific policy or intent of updating or revising forward-looking statements. Actual events and results may differ materially from those expressed or forecasted in forward-looking or aspirational statements due to a number of factors, including, but not limited to: general economic and business conditions; government actions and regulations directed at or affecting the housing market, the homebuilding industry or construction activities; costs and/or charges arising from regulatory compliance requirements or from legal, arbitral or regulatory proceedings, investigations, claims or settlements, including injunctions, consent decrees or other voluntary or involuntary restrictions or adjustments to our business operations; consumer interest in our new-home communities and products, particularly from first-time homebuyers and higher-income consumers; our ability to execute on our sustainability and other business plans or initiatives within the timeframes and at the cost, revenues or margins we expect; the pace, scale, trajectory and affordability of technologies that can generally address, or specifically enable us to address, climate change and any negative effects from it; an epidemic or pandemic (such as the outbreak and worldwide spread of COVID-19), and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, which may (as with COVID-19) precipitate or exacerbate one or more of the above-mentioned and/or other risks; and other events outside of our control. Please see our periodic reports and other filings with the U.S. Securities and Exchange Commission (SEC) for a further discussion of these and other risks and uncertainties applicable to our business and our sustainability initiatives. In addition, the inclusion of information, or the manner in which it is described herein, in this report should not be construed as a characterization regarding the materiality or financial impact of that information.