Here is a summary of the key takeaways from the webinar:
- Green lease clauses are the new normal – Landlords and tenants must collaborate to meet their respective ESG objectives, and investors seek such collaboration to improve environmental and social value within the community.
- Balance is key but one size does not fit all – The Better Buildings Partnership’s suite of provisions is an useful starting point aimed at providing a balanced set of green lease clauses to landlords and tenants, taking into account their respective ESG objectives and own ESG journey.
Key provisions:
- Data sharing: the regular and transparent sharing of environmental data – An accepted measuring tool which mainly impacts the landlords and tenants’ administrative obligations;
- Green energy: the procurement of electricity from 100% renewable energy sources – A tool towards both the landlords and tenants net zero carbon targets requiring thoughtful consideration due to its impact on costs and its potential for “greenwashing”;
- Embodied carbon: the greenhouse gas emissions that occur when extracting raw materials, manufacturing and transporting them and ultimately building or altering properties – A progress from the historic new material requirement but an important balancing exercise between costs incurred, any tenant’s corporate branding and the parties’ ESG strategies;
- Waste salvage: minimising waste sent to landfill by re-using/recycling where possible – A continuity to the embodied carbon objective with uncertainty around its effective monitoring and its potential for “greenwashing”;
- Social impact: the use of leases in solving social issues – A fairly new concern that requires detailed consideration in light of the location, the asset, the tenant and the parties’ own social impact initiatives and objectives. Further thoughts on effective monitoring and its potential for “greenwashing” will be crucial in its development.
The success of green lease clauses will depend on careful drafting, thoughtful implementation and ongoing cooperation but it seems clear that they will form an increasing part of any property transactions.
Please do not hesitate to get in touch should you wish to continue this dialogue or require expert advice in your property transactions.
Watch our webinar recording:
