Green Commercial Lease Clauses
This clause requires the parties to understand the environmental performance of leased premises and collaborate to improve that performance over time.
What this clause does
Provides a mechanism for assessing and improving the environmental performance of a premises. Buildings can create significant emissions through their use, and older building stock in particular can offer the opportunity for improved environmental performance. The way that landlords and tenants provide and use services to a building can also create emissions (for example, through the choice of electricity for the building and the amount of energy consumed and wasted generated in the building).
Clauses
1. Environmental obligations
1.1 [The parties must, within [12] months of [the date of this document] [jointly] commission an independent review and report of the Environmental Performance of the Premises (Environmental Performance Report) determining the Baseline Environmental Performance. The cost of the review [will be borne by the [Landlord][Tenant]][shared equally between the parties].]* [In addition to determining the Baseline Environmental Performance, the Environmental Performance Report must identify the Environmental Performance Factors contributing to the Baseline Environmental Performance that:
1.1.1 are fixed and unable to be improved through the actions of the parties during the term of the Lease [other than through [capital expenditure][the investment of in excess of $[●] over the term of the Lease] by either party] [Drafting note: Option to place limits on capital expenditure provided. Option may be adapted to cap (rather than exclude) capital expenditure if that is considered appropriate];
1.1.2 may be improved through the actions of the Landlord (Landlord’s Factors); and
1.1.3 may be improved through the actions of the Tenant (Tenant’s Factors).]
* [Drafting note: Delete if a baseline environmental performance has already been established.]
[EITHER]
1.2A [If the Premises does not meet the Baseline Environmental Performance, the [parties][Tenant][Landlord] must, within [a reasonable time] agree on a work plan to undertake the necessary works to ensure the Premises meets the Baseline Environmental Performance.]
[Drafting note: Insert paragraph [1.2A] to create a simpler clause that seeks to agree a plan to improve the environmental performance of the building.]
[OR]
1.2B [On receipt of the Environmental Performance Report:
1.2B.1 the Tenant must use reasonable endeavours to improve the Environmental Performance of the Tenant’s Factors; and
1.2B.2 the Landlord must use reasonable endeavours to improve the Environmental Performance of the Landlord’s Factors, with a view to improving the Baseline Environmental Performance of the Premises over the term of the Lease.]
1.3 The Tenant and the Landlord will meet [annually] to discuss the steps that each party:
1.3.1 has taken to date to improve the Landlord’s Factors and the Tenant’s Factors (as the case may be) and the overall impact of those steps on the Baseline Environmental Performance; and
1.3.2 proposes to take over the next [12] months to further improve the Baseline Environmental Performance.
[EITHER]
1.4A [The Tenant and Landlord must not do anything that decreases or adversely affects the Baseline Environmental Performance of the Premises.]
[Drafting note: Insert paragraph [1.4A] to create a more involved clause to improve the environmental performance of the building.]
[OR]
1.4B [The parties must use reasonable endeavours not to do anything which adversely affects
the Baseline Environmental Performance.]
1.5 The [parties][Tenant][Landlord] must:
1.5.1 at the cost of the [other party][Landlord][Tenant], provide to the [other party][Landlord][Tenant] all information held by the [relevant party][Tenant][Landlord], assistance, access (provided in accordance with clause [●] of [this document]) to the Premises and other facilities reasonably requested by the [other party][Landlord][Tenant]; and
1.5.2 provide reasonable cooperation (to the extent reasonably requested by the [other party][Landlord][Tenant]) in relation to any initiative reasonably requested by the [other party][Landlord][Tenant], in connection with the Environmental Performance or sustainability characteristics of the Premises.
1.6 The [parties][Tenant][Landlord] must use reasonable endeavours to:
1.6.1 minimise energy consumption and waste and to recycle waste generated at the Property[; and
1.6.2 ensure that the electricity consumed at the Premises is purchased from electricity retailers certifying, or holding themselves out, that they provide electricity from 100% renewable sources, or electricity that is otherwise ‘carbon zero’]. [Drafting note: Insert paragraph [1.6.2] if there is an expectation (and ability) to obtain certified carbonZero electricity.]
[Schedule [●]: Baseline Environmental Performance]
[Drafting note: Insert if a baseline environmental performance has already been established.]
Definitions
[Baseline Environmental Performance means the baseline measure for the Environmental Performance of the Premises is attached as [Schedule [●]].] [Drafting note: Insert if a baseline environmental performance has already been established.]
[Environmental Performance means an assessment of the impact that the Premises has on its surrounding environment, having regard to the Environmental Performance Factors.
Environmental Performance Factors means all or any of the following in relation to the Premises:
(a) energy consumption;
(b) water consumption and discharge;
(c) waste generation and management; and/or
(d) generation and/or emission of GHGs.]
[Drafting note: An alternative, lower-ambition option for Campbell & Zaynah’s Clause is to remove the definitions of Environmental Performance and Environmental Performance Factors, delete paragraph [1.1] and use ‘environmental performance’ in paragraph [1.2], so that the clause is a softer statement of ambition around the greenness of the premises.]
Environmental Performance Report has the meaning given to it in paragraph [1.1].
GHGs means the gases that trap thermal radiation in the earth’s atmosphere. They are specified by the United Nations Framework Convention on Climate Change (UNFCCC) in Annex A to the Kyoto Protocol and may be updated periodically. [Drafting note: Consider moving some or all of these definitions to the interpretation section of the lease, particularly if other TCLP clauses are used in the document that draws on them.]
Landlord’s Factors has the meaning given to it in paragraph [1.1.2].
Tenant’s Factors has the meaning given to it in paragraph [1.1.3].
Make this clause better
Tell us about your experience with this clause so we can improve it.