It’s Not Easy Building Green: Green Building and Risk Management Challenges

How big is building green? According to a 2016 World Green Building Trends report1, consumer demand has propelled the market to a trillion-dollar industry.

The advantages of green buildings are many. According to the U.S. Department of Energy, LEED (Leadership in Energy and Environmental Design) certified buildings have lower CO2 emissions, consume less energy and water, and divert more waste from landfills than standard buildings.2 Perhaps that’s why the global green building trend has continued to rise each year. A recent U.S. Green Building Council study reported that the market for green building materials reached nearly $44 billion in 2015, and could grow at a compound rate of 9.5 percent a year through 2019.3

While the popularity of building green soars, there are challenges that risk managers, builders, and property owners must consider.

High Replacement Costs

Many of the materials necessary for building green come with a higher price tag. For example, if a LEED certified building sustains damage following a storm, property owners should expect to pay more to retain its energy-efficient LEED status than it might cost to replace the building to non-LEED specifications. Other factors that have the potential to increase the cost to rebuild are the fact that green building materials are harder to come by and replacement parts could be limited by geographic location.

The Right Ventilation

HVAC considerations can get tricky for green buildings, especially if the building resides in a humid region. One aspect of LEED certification considers the amount of outside air brought into a building. According to Property Casualty 360, “the designer must consider the increased energy load (and cost) and HVAC equipment sizing required to properly dehumidify a building when exceeding the minimum outside air requirements recommended by the American Society of Heating, Refrigerating and Air-Conditioning Engineers.”4

Combatting Moisture

The arrival of moisture and mold in a green building can happen as a result of “bulk water intrusion through the building envelope or a relative humidity increase because of the heating, ventilating and air conditioning (HVAC) system,” according to the Liberty Building Forensics Group.5 Issues with moisture can wreak havoc on a building, eventually leading to the gradual decline of a structure. Health issues might also become a problem if the mold grows to other parts of the building.

New and Unknown Materials

Finding a construction company with advanced knowledge of green building materials has become easier, but it’s not a sure thing. As green technology continues to evolve, builders find themselves sorting out parts that haven’t been on the market for very long. A study by Zurich Insurance Group points out that “many of these products are being developed quickly and are not being properly field tested. This can lead to legal disputes over who is responsible if the product fails or does not perform to expectations.”6

Consistent Performance Expectations

Unfortunately, property owners might not be getting all they paid for in the present and future when it comes to building green because the construction process is always evolving. In meeting expectations, Business Insurance recommends companies “make certain that the consultants and advisors they select are well-qualified. In addition, risk managers have to be concerned about whether the building continues to perform up to promised expectations.”7

Defining Green

The process of building green is somewhat ambiguous and continually evolving. That said, the main goal is to create a structure that poses little or no threat to to environment. Understanding rating systems like those established by LEED or the Green Building Initiative as well as the hazards standard buildings pose to the environment may be a good place to start.

It’s important construction companies and property owners have an understanding of building green and what’s possible in a selected geographic location. Wanting to help the environment is a worthy pursuit, but acknowledging any possible limitations could save a lot of time and money in the life of a building.

Want to see how Centurisk can help you gather property insurance data for your big building challenges? Simply fill out the form below and a member of our team will be in touch!

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