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Last edited 05 Apr 2020
Recent years have seen the emergence of an increasing amount of guidance, policy and legislation relating to sustainability and corporate social responsibility aimed in particular at commercial and public properties which are significant consumers of energy.
In this regard, green leases are seen as a progressive step forward for sustainable development. In very broad terms, they are leases which contain specific provisions in relation to the sustainable operation of a property. This can include measures relating to; energy efficiency, waste reduction, waste management, water efficiency and so on as well as social and ethical issues. Typically they are used for leases for commercial or public buildings, whether new or existing, and may include obligations for both the landlord and tenant.
Green leases can help:
- Reduce resource consumption.
- Improve energy efficiency.
- Ensure buildings are operated optimally and in accordance with their design.
- Reduce operating costs.
- Improve corporate image.
- Attract environmentally-aware tenants.
- Help demonstrate compliance with the Energy Performance of Buildings Directive.
- Contribute to compliance with energy efficiency and sustainability targets within the building regulations.
- Allow agreement of shared obligations to ensure the efficient running of the building through management committees.
- Help define procedures for dispute resolution.
- Help set targets, perhaps through an Energy Management Plan (EMP).
- Help monitor and record performance.
- Improve information collection through separate metering.
- Identify remedial actions.
- Define tenant fit-out and alterations policies.
 Shades of green
There are a variety of shades of green leases from 'light green' to 'dark green':
- A light green lease may include the setting of obligations but without any targets or legal status.
- A mid-green lease might involve the establishment of specific targets and the development of an environmental or energy action plan for monitoring purposes but without legal enforcement if targets are not met.
- A dark green lease might include obligations and targets formalised through Heads of Terms which become legally binding, with a breach potentially resulting in financial penalties or a dispute resolution process.
For example, a ‘darker green’ obligation might read: ‘The landlord will provide to the tenant an environmental information pack before entering into this lease and update it annually within 1 month of the end of the service charge year”.’
In 2009, The Centre for Research in the Built Environment (CRiBE) at Cardiff University has published Greening the commercial property sector: A guide for developing and implementing best practice through the UK leasing process, which provides examples of ‘green’ clauses which could be incorporated into leases.
These are grouped under the following headings:
- Co-operation obligation.
- Environmental management plan.
- Development of a building management committee.
- Data sharing and metering.
- Restriction on tenant alterations and landlord’s works.
- Rent review.
- Dispute resolution.
 Related articles on Designing Buildings Wiki.
- Energy Performance of Buildings Directive.
- Green fit-out agreement.
- Landlord and Tenant Act.
- Lease Negotiations - Tenants Checklist.
- Rent review.
- Sample retail lease.
- Sustainable development.
 External references
- Greening the Commercial Property Sector: A Guide for Developing and Implementing Best Practice through the UK Leasing Process, Good Practice Guide. Centre for Research in the Built Environment.
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