Sustainability is the new buzzword among building and design professionals as several trade and interest groups have established certifications for companies to show they're green, but the projects carry some risks.

“Sustainability encompasses an enormous territory,” said Rodney J. Taylor, Orlando, Fla.-based managing director of Aon Corp.'s environmental services group. “There was a point where everyone was rushing to become sustainable, but the economic downturn forced people to find ways to survive rather than becoming sustainable. Now that focus on sustainability seems to be returning.”

There are 894 sustainable certification initiatives set up around the globe, according to the Winnipeg, Canada-based International Institute for Sustainable Development. Probably the most widely known is the U.S. Green Building Council's Leadership in Energy and Environmental Design certification, which is awarded for sustainable buildings.

“A lot of trade associations are trying to create best practices for their industry,” said John Beauchamp, Philadelphia-based senior underwriter with Beazley P.L.C.'s specialty lines division.

There are several sustainability initiatives (see box) that are set up by trade groups such as the American Society of Heating, Refrigeration and Air-Conditioning Engineers Inc., for example, that provide best practices standards for their industry to improve the performance of building design and system operations.

Certifications usually are issued by third-party evaluators after a project is completed.

With little historical data on the benefits of sustainable projects, including savings in energy costs and life span of the materials used, there are several layers of risk that businesses, communities, designers, builders and contractors must consider as part of a green building project.

“When doing a sustainability project, you really have to think about if you're going to get a return on your investment as there really isn't a lot of data out there that shows what works and what doesn't,” said Frank Westfall, Philadelphia-based vp and product specialist for ESIS Inc., a third-party administrator unit of ACE Ltd.

Risks vary depending on a company or individual's function within a sustainability project, insurers say. For example, a property owner could be uninformed or have unrealistic expectations of a project, while contractors and designers risk making uninsurable performance or certification guarantees and/or warranties on sustainable projects.

“From a contractor's perspective, the biggest risk is failure to deliver on the features you promised,” said Mr. Westfall. “If you promised a gold LEED-standard building, for example, and it doesn't meet those requirements, that's a problem.”

For project owners, the potential of not securing a certification is a real risk to consider, insurers said. Aspects of a sustainable certification include energy savings, improved productivity and worker retention, though it's not clear how those returns on investment can be measured, experts said.

A missed certification could include a loss of tenants and loss of tax credits, insurers said, adding that while there is insurance coverage available for errors and omissions, insurers are not keen to insure failure to deliver a specific certification.

“People who design and build these projects have a clear liability if the project fails to deliver what was promised in the contract,” Mr. Taylor said. “The insurance industry really hasn't caught up with that. Insurers are not willing to insure the failure of delivery.”

Maybe the most significant aspect of sustainability projects and programs is that they are done on a voluntary basis. In the U.S., there isn't any legal requirement to participate in green building and planning, which is partly why there isn't much data on how efficient these projects are.

“Just because you have a LEED-certified building doesn't mean that you are in a sustainable building,” Mr. Taylor said. “You might get points for building on a brownfield, being close to public transportation, bike racks and more windows to reduce electricity use, but that doesn't necessarily mean that you have a sustainable building.”

A sustainable building is designed to reduce the overall impact of the building on human health and natural environment by efficiently using energy, water and other resources; protecting occupant health and improving employee productivity; and reducing waste pollution and environmental degradation, according to the U.S. Environmental Protection Agency.

Further, green building is the practice of creating structures and using processes that are environmentally responsible and resource-efficient throughout a building's life cycle from siting to design, construction, operation, maintenance, renovation and deconstruction, according to the EPA. The green building practice expands and complements the classical building design concerns of economy, utility, durability and comfort.

Energy design and efficiency is a huge exposure in a sustainability project, said Jonathan Halloran, Schaumburg, Ill.-based national director of Zurich North America's construction division.

For example, a structure designed and built to improve the amount of energy used to heat and cool it could be flawed if the heating, ventilating and air conditioning system is too small or the wrong materials are used. Part of this, he said, could be due to being in a rush to complete the project and keep the client happy, or it could be due to unfamiliarity with sustainable building.

Sustainability still is evolving, experts on the issue said, as are the risks associated with it. As more projects come online during the next few years and more data becomes available, they hope certifications will start to gain more credibility.

“(Sustainability) is forcing forward thinking,” Mr. Beauchamp said. “We're dealing with a cultural change and we are just starting to scratch the surface on this subject. There are not a lot of guiding principles and we are still developing ways to measure sustainability.”