What are they?
A green lease is a standard form lease with additional clauses included which provide for the management and improvement of the environmental aspects of a building by both owner and tenant. These clauses often relate to the sharing of utility consumption data, protecting the energy performance rating of the building and general cooperation on environmental matters. Owners, occupants and their legal advisors may see the introduction of environmental clauses in a lease as slowing down the negotiation process, but they should be seen as a clear benefit rather than a burden.
Why are they useful?
A green lease demonstrates a strong environmental commitment and enables cooperation between owner and occupants, which will in turn support the CSR obligations and corporate reporting requirements of each party.
Obligations can protect the energy performance rating of a building by restricting alterations that might be detrimental.
Issues to be aware of
Owners, tenants and their legal advisors can be reluctant to agree to the inclusion of environmental clauses in a lease, even though such provisions are normally of benefit to both owner and tenant.
Tenants may be concerned that the building owner will be able to use the environmental clauses as a way of improving a building at their expense, but appropriately worded clauses should allay any fears.
All building types.
Questions to ask
- Is either the owner or tenant offering / expecting to include environmental clauses in the lease?
- If not, how will the owner be working with the tenant to ensure the environmental performance of the building is satisfactory?
Green Lease material from DRET