Require landlords to act reasonably when tenants propose alterations to their premises (and associated change of use) or improvements to common areas, which have a positive climate impact.
Why use this?
To help tenants carry out environmental improvements knowing that landlords need to act reasonably in allowing these. The clause also encourages more efficient use of land and buildings and more collaboration between landlords and tenants to achieve climate goals.
How to use this clause
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The clauses on this website (and published in our Climate Contract Playbook) have been prepared in good faith on a pro bono basis and are free to download and use. The clauses have been drafted and edited by a variety of lawyers and, as such, the approaches to drafting may not conform to any particular drafting norms. We acknowledge this as a consequence of the collaborative drafting process.
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At present, all the clauses are based on the laws of England and Wales. We encourage the conversion of these precedent clauses for use in other jurisdictions.
(A) The Landlord and Tenant [have signed up to the Race to Zero and] acknowledge their common intention to achieve their respective net zero targets and align with the objectives of the Paris Agreement, in particular pursuing efforts to limit global temperature increase to 1.5 degrees Celsius above pre-industrial levels and achieve net zero or net negative emissions by 2050 or sooner, in a manner that promotes a just transition to a low carbon economy and that results in at least a 7%* reduction of greenhouse gas emissions year on year.
Environmental Improvements means alterations made by the Tenant that improve the Environmental Performance of the Premises, the Estate or the Building;
Environmental Performance means all or any of the following:
(a) achieving the Tenant’s [or Landlord’s] Net Zero Target including the consumption of energy and associated generation of GHG Emissions;
(b) the consumption of water;
(c) waste generation and management; and
(d) any other environmental impact arising from the use or operation of the Premises, the Estate or the Building.
GHG Emissions means the Landlord’s [and Tenant’s] emissions of GHGs from all sources related to this Lease, categorised as scope 1, 2 and 3 emissions in The Greenhouse Gas Protocol: A Corporate Accounting and Reporting, Standard Revised Edition 2015 as updated from time to time [Drafting note: Scope 1, 2 and 3 emissions are defined on page 27 of the GHG Protocol].
Greenhouse Gases (GHGs) means the natural and anthropogenic gases that trap thermal radiation in the earth’s atmosphere and are specified in Annex A to the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC) [or otherwise specified by the UNFCCC at the date of this Lease], as may be amended from time to time[, which include carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6), and nitrogen trifluoride (NF3).]
Net Zero Target means both a reduction of GHG Emissions overall and a removal of GHG Emissions associated with the Offsets acquired to address Residual Emissions of the [Landlord and] Tenant [respectively] by a specified date before 2050 to achieve a balance between the sources and sinks of GHG Emissions in a calendar year and for each subsequent year thereafter and the objectives of the Paris Agreement.
Offset means the purchase of carbon credits from a project:
(i) that has been verified in accordance with [insert name of voluntary standard] or under the United Nations Framework Convention on Climate Change (UNFCCC) clean development mechanism (CDM) [or [successor/ equivalent] UNFCCC mechanism];
(ii) where the emissions of GHG avoided, reduced or removed by the project are additional;
(iii) that in relation to GHG removals, employs long-lived storage methods that have a low risk of reversal over millennia;
(iv) that prioritises the removal of GHG from the atmosphere rather than avoids or reduces third party emissions of GHG; and
(v) that takes account of a just transition and addresses wider social and ecological goals.
Residual Emissions means the GHG Emissions, that are emitted after all reasonable efforts have been made by the [Landlord] [and Tenant] to reduce GHG Emissions.
For Tenant’s Alterations covenant
The Tenant may, with the Landlord’s consent, which is not to be unreasonably withheld or delayed, carry out [structural and] non-structural works to the Premises [or to unbuilt parts of the Estate] which [the Tenant can demonstrate by the provision of an [energy efficiency report/ecology report/other report]] will improve the Environmental Performance of the Premises, Building or Estate. The Landlord can refuse consent to any proposed works which in the Landlord’s reasonable opinion would have a detrimental impact on the investment value of the Landlord’s reversionary interest in the Premises, Building or Estate.
For Tenant’s Yielding Up covenant
By the End Date the Tenant must have removed [INSERT DETAILS]
save that the Tenant shall not be required to remove any Environmental Improvements [unless the Landlord has given the Tenant at least [X] months’ notice that it requires the Tenant to remove all or part of any Environmental Improvements on the basis that those works remaining after the End Date would have a detrimental impact on the investment value of the Landlord’s reversionary interest in the Premises, Building or Estate].