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A project owner wants to do a green retrofit to her commercial building.
She seeks the gold certification of the Washington-based U.S. Green Building Council's Leadership in Energy and Environmental Design program.
The owner signs up a tenant to a 20-year lease conditional on that gold certification.
But the contractor fails to incorporate the promised green products into the building. As a result, the owner does not get the gold certification and she loses her tenant, which has a corporate mandate to be in a LEED-certified building.
Furthermore, because her construction loan is based on that tenant's occupancy, she may lose the property itself in foreclosure as well.
This scenario is presented by attorney Richard J. Sobelsohn, an associate with New York-based Moses & Singer L.L.P. in his construction law classes.
It illustrates the problem of greenwashing, which experts say is endemic in the green construction industry, and is only likely to get worse.
Although it has wider implications, in the construction context greenwashing can be described as the practice of overpromising or providing misleading information on the beneficial green effects products or services will provide.
Greenwashing is “rampant in the construction industry” because it can impact products and services, said Mr. Sobelsohn. The problem can arise when contractors find that green products are unavailable, creating a delay that can impact their completion date, and they install non-green products instead.
In other instances, he said, contractors “are holding themselves out as sustainable contractors, and they're not.” In some cases it may be because their competitors are LEED certified, and they feel if they do not do so, “they're going to lose the entire market,” said Mr. Sobelsohn.
The issue applies to new construction as well as retrofit projects and even green cleaning companies, which may not be using the right products, or providing their workers with the appropriate training, he said.
Greenwashing is “a big issue, and it's only going to get bigger as owners, developers, tenants, even homeowners, focus more and more on energy performance,” said Christopher W. Cheatham, managing partner at Washington-based Cheatham Consulting L.L.C.
“It's become a big issue in the world of green building certification” because some of the buildings that were getting LEED certified “weren't performing as they were expected to,” Mr. Cheatham said.
For example, energy modeling for a building might show an energy savings of 40%, but once completed the project's energy use may be only 20% less or even the same as a nongreen building's, Mr. Cheatham said. In that situation, an owner might claim there was greenwashing by the architect or developer.
Rod Taylor, Windermere, Fla.-based managing director of Aon P.L.C.'s environmental services group, said, “There is a lot of misrepresentation, or failure to verify the statements that are made” with respect to green products' performance.
He added, “There isn't any definition in most places of what is a green product, what does that actually mean.”
“It's a fairly substantial problem,” said Jeffrey D. Masters, a partner with law firm Cox, Castle & Nicholson L.L.P. in Los Angeles. This is because so many companies are interested in green building, and “it's hard for the building owner or developer to assess the functionality of various allegedly green products and technologies.”
Linda D. Kornfeld, a partner with law firm Jenner & Block L.L.P. in Los Angeles, said as the rate of green construction continues to grow and firms compete for business, “there arguably will be a good deal of greenwashing.”
One way for owners to protect themselves, said Mr. Sobelsohn, is through careful attention to their contracts.
The contract's language is “one of the easiest ways to control it,” said Brendan McEneany, who runs Santa Monica, Calif.'s green building program and is board chair of USGBC's Los Angeles chapter.
Owners could incorporate risks and incentives into the contract, said Mr. Cheatham.
Ms. Kornfeld said, “It's always important when involved in a construction project to work with entities that have a reputation for excellent work” and, in this particular situation, it will probably be critical to have research “to look behind representations.”
Mr. Masters said, it would be helpful if the green consulting team or those “who have deep product knowledge” can “evaluate the proposed green products and assemblies, and tell the builder or owner, ‘Yes, these are actually going to perform.'”
Karen Erger, vp, director of practice risk management at Lockton Cos. L.L.C. in Kansas City, Mo., said, “Both the designer and the owner have a role to play here. The designer can help himself or herself and the owner by helping the owner understand what the risks of a new product may be.
“Just like you sign the informed consent form at the doctor's when you're having a procedure, it's helpful for the owner to understand there's risk associated with a brand new, untested product,” she said.
A USGBC spokeswoman said, “It's important to verify what you're doing as an organization.” If you have a corporate sustainability program, “show the data to back it up, and clearly be open and transparent about the green that you're doing.”