The green or sustainable building movement originated as a grassroots campaign to raise public awareness about the environmental impacts of global warming, and as part of a concerted effort to minimize the negative environmental consequences of building development.

Today, knowledge and understanding of green building principles are an essential part of any legal and risk management plan for all stakeholders.

Defining Green
In the past several years, organizations such as the U.S. Green Building Council (USGBC) and the Green Building Initiative (GBI) have enlisted professionals from virtually every sector of the building industry to assist in expediting the adoption of building practices that result in energy-efficient, healthier and environmentally sustainable places to live and work. For example, the USGBC developed the Leadership in Energy and Environmental Design (LEED) green building rating system, which has quickly become a nationally accepted benchmark for the design, construction and operation of high-performance green buildings.

According to the USGBC, LEED gives building owners and operators the tools they need to have an immediate and measurable impact on their buildings’ performance. The USGBC further advocates that LEED promote a whole-building approach to sustainability by recognizing performance in five key areas of human and environmental health: sustainable site development, water savings, energy efficiency, materials selection and indoor environmental quality.

At the same time, the stated mission of GBI, developer of the Green Globes certification process, is to accelerate the adoption of building practices that result in energy-efficient, healthier and environmentally sustainable buildings by promoting credible and practical green building approaches for residential and commercial construction.  

Neither the USGBC nor GBI are governmental agencies. Therefore, neither LEED nor Green Globes are mandatory standards unless they are imposed by either governmental requirements or by contract. However, it is important to note that the LEED certification process itself is a quasi-legal process requiring stakeholders to present evidence, await judgment of a third party and, potentially, engage in an appeals process.

Risks and Rewards

Studies have shown that green buildings often result in significant health benefits, ranging from increased productivity and employee satisfaction to lower absenteeism due to illness.

Indeed, although only a small percentage of traditional buildings are commissioned, the same commissioning process that provides the documentation leading to LEED certification might afford owners payback of less than nine months.

At the same time, studies have shown that green buildings often result in significant health benefits, ranging from increased productivity and employee satisfaction to lower absenteeism due to illness. All of these benefits and others derived from building green may reduce potential exposure to liability.  

Managing Risks
Green design and construction are rapidly becoming the new best practices for businesses today. Indeed, over the past few years, the green building movement has picked up significant momentum in Canada, the United States and globally.        

Although most people do not deny that there are tangible environmental benefits of green building, sustainable design is not without its critics. Indeed, some skeptics of this evolving building practice question the overall economic viability of incorporating new, environmentally friendly technologies and design into buildings, while others remain unaware of the significant health and community benefits attendant to building green.  

Inextricably intertwined with the economics of green building are the legal risks and issues. By developing a better understanding of them, the parties to the design and construction process are able to focus on the development and implementation of effective green strategies that are both good for the bottom line and may actually pose less risk than traditional projects.

Whether you are considering building a new facility or renovating an existing one, every stakeholder in the green building process should have an understanding of the fundamentals of green design and construction in order to, among other things, identify, understand and ultimately manage the unique legal issues and risks confronting them on sustainable building projects.  

Whether the green design and construction requirements are imposed by contract or legislatively, there may be serious ramifications for the failure to achieve applicable standards. Such penalties may include the loss of funding or grant eligibility, rescission of tax credits, fines and/or penalties, imposition of liquidated damages, adverse marketing perception and corresponding reduction of valuation, or breach of lease or other obligation, to name a few.  

Such risks may be transferred – at least in part – by use of contract provisions, including indemnity language.  Equally important to carefully negotiating and crafting contract language is the need to minimize the likelihood of a dispute over the applicable standard and corresponding requirements.  

At the outset of the project, all stakeholders should meet to discuss and agree upon at least the following issues:

• What is meant by “green?”
• What standard(s) apply to the project or portion(s) of the project?
• What paperwork is required and who is responsible for preparing, reviewing, approving and submitting it?  
• To whom must the paperwork be submitted and when?
• Does the prime or general contract clearly set forth the parties’ obligations?
• Does the prime or general contract contain flow-down requirements and are all consultants, subcontractors, vendors and suppliers bound to the terms and conditions of the prime or general contract?
• Does the agreement accurately and adequately set forth the priorities of the parties and identify the end-user?
• Does the agreement make clear who is responsible to operate and maintain the facility?
• Is re-certification a requirement of the agreement?
• What are the penalties for failure to achieve the applicable standard of the contract and of any applicable governmental agency?
• What other laws, regulations and/or requirements are applicable to the project and/or incorporated by reference into the contract? What are the requirements of the building code?
• Are there any legal impediments to the proposed procurement or project delivery method?
• What certifications are required and by whom?
• How are the parties’ insurance obligations impacted by the project or the contract?  (i.e. Am I taking on an uninsurable risk?)
• What is the applicable standard of care for the project?
• How are the payment and performance bonds impacted by the project or the contract?  

Setting Standards
For many years, so-called green requirements were relatively straightforward and emanated from only a few sources. Perhaps the most well known is the USGBC’s LEED. LEED claims to provide reliable building design and performance measurement systems that offer building owners and operators a comprehensive framework for meeting sustainability goals and assessing building performance in six categories: sustainable sites, water efficiency, energy and atmosphere, materials and resources, indoor environmental quality, and innovation and the design process.  

Four progressive levels of LEED certification – Certified, Silver, Gold and Platinum – can be achieved based on the number of points awarded to a given building project. This reference standard is often incorporated into contracts or specifications and imposes obligations on each of the stakeholders in the green building process.

In 2005, GBI brought Green Globes to the United States. Users of Green Globes can gain one to four “globes” for certification with ratings in seven categories, based on a 1,000-point scale. Since the development of LEED and Green Globes and with the evolution of legislation and other requirements imposed by public and private owners, LEED is no longer the only reference or standard used interchangeably with green requirements. Indeed, government agencies are altering and/or modifying LEED and Green Globes or developing their own hybrid versions of these standards. To properly manage the risks attendant to green building projects, it is essential to first identify and understand them.

Green Resources
Despite a genuine need, there are limited resources available that identify the legal issues and risks attendant to green building projects. Informed stakeholders often retain qualified legal counsel to assist them in navigating the virtually unchartered and untested legal waters on which green building projects sail. However, many stakeholders either fail to recognize the existence of new and/or different legal and risk management issues or are unaware that there are resources available to assist them.  

In an effort to respond to the green building movement, the American Institute of Architects (AIA) issued AIA Document B214-2004, Standard Form of Architect’s Services: LEED Certification for Use of Projects Seeking LEED Certification. The document must be modified based on a proper evaluation and assessment of the legal and risk management issues attendant to any given project.   

As part of any risk management program, each stakeholder in the green building movement should identify and understand the legal issues and risks attendant to green building. To quote singer and songwriter Pete Seeger, “Education is when you read the fine print. Experience is what you get when you don’t.”

Leah A. Rochwarg is a partner in the construction practice group of Seyfarth Shaw LLP and is a LEED-accredited professional. She can be contacted at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .