Shades of Green: Green Certifications and Greenwashing

EDITOR’S NOTE:

This is the fifth article in the five-part 360Value Green Building Article Series, intended to inform insurance professionals about the growing green building trend and how it may affect insurers in the future. The 360Value team has a comprehensive understanding of green building techniques and is actively studying this emerging issue to define more clearly how to incorporate the various green building options into 360Value.

This article discusses various green building certifications and warns insurers about a growing trend of companies falsely claiming to be green.

by Mike Fulton, Assistant Vice President at Xactware, Rob Caron, Senior Construction Specialist at AIR Worldwide, and Leo Wheeler, Structural Data Analyst at Xactware

Green building continues to gain popularity, but can be difficult to quantify. Because of the “whole systems” approach needed to accurately determine the greenness of a structure, it isn’t obvious to the layperson which material, method, or technology is better than another. Several green rating organizations exist to help alleviate some of the confusion about identifying green buildings. However, each uses different criteria to determine green structures, potentially leading to even more confusion.

The Early Days of Certification

Green building started on the periphery of the construction world with only a few pioneers and trailblazers initially adopting it. Once articulated and put into practice, the concepts of green building began to appeal to wider audiences, and certain communities embraced it whole-heartedly.

Those early adopters began to write their own guidelines about what was green and to what extent. Other like-minded communities copied that approach, or parts of it, and made modifications as they went. Before long, many local green building certifications and ratings existed. Eventually, some of those guidelines were adapted and applied at the national level.

Other countries took additional processes and credit programs and adapted them as needed to apply to the U.S. market. Now, there are dozens of different green ratings that a building could have. The largest and most popular programs are USGBC’s LEED®, the NAHB green building guidelines, and Green Globes. Choosing the appropriate certification depends on the desired goals of the building owner. ISO makes no claim as to the superiority of any one system over another.

USGBC’s LEED

The Leadership in Energy and Environmental Design (LEED®) standard, developed by the U.S. Green Building Council, has become arguably the most well-known green building standard in the United States. The USGBC’s LEED program has several rating systems for commercial properties and also supports residential construction through the LEED for Homes reference guide.

LEED for homes is handled far differently than the other rating systems. The ratings are conducted by local home raters who actually inspect the property. For remodeling, the USGBC has partnered with the American Society of Interior Designers to offer the REGREEN Guidelines, although no LEED certification is available for remodeling or partial rebuilding. The REGREEN guidelines aren’t a rating system but are based in part on LEED and designed to accommodate the different challenges inherent to remodeling.

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National Association of Home Builders/International Code Council

In 2005, the National Association of Home Builders (NAHB) released its green building certification program. The program was developed through a public process that relied heavily on existing green programs employed by various building and trade associations, a review of building science principles and best practices, and a review of existing life-cycle assessment tools, such as Building for Environmental and Economic Sustainability and ATHENA®. The NAHB developed the guidelines with a primary focus on single-family homes.

In an attempt to provide a standard definition of green building, the International Code Council created the National Green Building Standard (ICC 700) and adopted the NAHB standards in 2008. The ICC 700 guidelines extend the NAHB standards also to cover multi-unit residential buildings, site development projects, and most additions, renovations, and partial rebuilds to single-family homes and multi-unit buildings.

Green Globes

Several international organizations and experts developed the Green Globes system from a European green building standard called Building Research Establishment Environmental Assessment Method, and it has been widely adopted in Canada. Green Globes is an online questionnaire-based method with optional third-party certification, the objective of which is to provide a simpler, lower-cost green building rating system. Green Globes certifies commercial buildings under two certifications: new construction and continual improvement of existing buildings. Green Globes uses the NAHB standards for evaluating residential buildings.

Similarities

All three guidelines use a point system and several broad categories to determine a rating that indicates the “shade of green” of a given building. The number of categories and points in each rating system differs among certifications. But if the categories are grouped into logical bins (as depicted below), and the number of points is considered as a percentage of the total, they’re all quite similar.

Please note: The percentages listed in the table are for comparative purposes only. Also, the “General Category” column reflects the actual categories defined by each certification. However, actual categories may be more specific, and some titles are different.

All three systems also use either four or five tiers to denote the “shade” of green. The tiers are based on a percentage or the total points possible.

Differences

Despite the similarities, the ratings systems are not related or interchangeable — a top rating in one system may not equal a top rating in another. That’s because the assigned points that make up the scores are based on specific choices in materials, methods, or design. The effect of those choices can vary significantly across the rating systems. Knowing a building has a particular rating in a particular system doesn’t actually tell us anything specific about what’s in that building. For example, it will take more than simply knowing the rating to determine an accurate replacement cost.

The verification process and the cost of attaining a rating can differ significantly among the three systems. It’s difficult to quantify the cost of certification/verification, but LEED is generally the most expensive rating to obtain, while Green Globes is the least expensive. Building owners should consider what a rating means to them and try to quantify the benefits of having a particular rating before undertaking the process.

Greenwashing

In addition to the rating systems, the effect of “greenwashing” on materials and process is another matter for insurers to consider. According to Wikipedia, greenwashing describes the practice of companies disingenuously spinning their products and policies as environmentally friendly. It’s a deceptive use of the green building movement in marketing.

The term “green sheen” describes organizations that falsely claim they’re adopting practices beneficial to the environment. Consumers are misled to think they’re getting a green product, when in reality they may be purchasing a product that’s harmful to the environment.

Property owners and insurers should watch out for these specific greenwashing deceptions:

• False labeling — Either through images or words, the impression is given that a third party has certified or endorsed a product as green. Oftentimes, the product will have some form of a green label seal that may look like an official seal of approval.
• Narrow attributes — Companies may consider products green for obscure or very narrow attributes. Should you consider paper green if it comes from a sustainably harvested forest? Maybe, maybe not. The making of paper includes the use of energy, greenhouse gas emissions, water and air pollution, and other factors that companies should consider.
• Poorly defined claims — Vague, poorly defined, overly broad, or unrealistic claims can mislead the consumer. “All natural” is an excellent example. Products may contain mercury, uranium, formaldehyde, or even arsenic and still claim to be “all natural.”
• Irrelevance — Making a claim that has no significance to environmentally friendly products. A claim of CFC-free would be irrelevant simply because using CFCs is against the law.
• Falsification of claims — This is not as prevalent an issue, but it does exist. A company may claim the Building Green organization approved its product or it’s Energy Star-certified or registered when it’s not. Those companies rely on customers taking their claims at face value.

In December 2007, TerraChoice released a study called “The Six Sins of Greenwashing.” Their research showed that more than 99 percent of 1,018 surveyed products were guilty of some form of greenwashing. You can read a full copy of the report here.

Conclusion

Insurers concerned about the legitimacy of a construction or reconstruction project built to green specifications can turn to the various certifications to help make that determination. But it’s important to note that just because a structure didn’t meet a particular certification doesn’t mean the project didn’t employ green building methods and materials. That can present a challenge to insurers as green building becomes mainstream in the coming years, particularly if greenwashing becomes more prevalent in the industry.

The Green Building Article Series has given you the background necessary to understand not only the principals of green building but also the challenges that arise in attempting to quantify or differentiate a green building from a “standard” building.

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