Model clause

Promotion of Carbon Sinks and Ecological Restoration in Lettings of Rural Land

Georgie's Clause

A clause to incentivise rural and agricultural tenants to reduce their greenhouse gases (GHGs), promote carbon sequestration (absorption and storage) and encourage rewilding and biodiversity.

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Why use this?

Although there is a general requirement under cross compliance conditions and the Agricultural Act 1947 to uphold certain standards of good husbandry, a tenant has no financial incentive to promote the environment in short term lets.

Adherence to this clause could become a badge of excellence that will encourage future lettings and improve the value of the land.

How it promotes a net zero future

This clause promotes positive actions and outcomes even from short term tenants, shifting the emphasis of tenancies away from the ethos of “do no harm” to “do some good” for the environment.

As well as the reduction of GHG emissions, there are other additional environmental benefits, such as improving soil condition, and increasing the populations of beneficial insects and pollinators (which improves the resilience of those species to climate change as well as increasing biodiversity).

Disclaimer - please read

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.

The clauses on this website (and published in our Climate Contract Playbook) are provided on an ‘as is’ basis and without any representation or warranty as to accuracy or that the clauses will achieve the relevant climate goal or any other outcome.

This website (and the Climate Contract Playbook) does not comprise, constitute or provide personal, specific or individual recommendations or advice of any kind, and does not contain legal or financial advice. The clauses are precedents for legal professionals to use, amend and negotiate using their professional skill and judgement and at their own risk.

While care has been taken in the drafting of these clauses, neither The Chancery Lane Project nor any of its contributors owe a duty of care to any party in relation to their preparation and do not accept any liability for any errors or omissions, nor for any loss incurred by any person relying on or using these clauses or any other person. Users should use their own professional judgement in the application of these clauses to any particular circumstance or jurisdiction or seek independent legal advice.

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.

The clause

Additional Definitions 

AA 2020 means the Agriculture Act 2020 and implementing acts and laws and all subordinate legislation, guidance and codes of practice made from time to time under them and any similar replacement or similar additional conditions, requirements and standards and all legislation, guidance and codes of practice made from time to time under them by the UK government or any devolved authority applicable to the Property. 

Biodiversity Objectives means to manage the Property in a way that maintains and, where possible, improves the ecological health and diversity of the Property in accordance with the known historical biodiversity of the Property, including the conservation of ecosystems and natural habitats and the maintenance and recovery of viable populations of species in their natural surroundings and, in the case of domesticated or cultivated species, their continued existence and in particular matters set out in Schedule 1. 

Carbon Sequestration means the process by which carbon sinks remove carbon dioxide from the atmosphere. This occurs both naturally, via the storage of carbon in plants, soils, geological formations and the oceans, and through anthropogenic activities involving geoengineering techniques. 

Carbon Sink Capacity means the ability of natural reservoirs including (without prejudice to the generality) hedgerows, woodlands, wetlands, peatlands and soils to absorb more carbon than they emit. 

Climate Benefits means any environmental benefit including any increase of Carbon Sequestration and/or the promotion of Carbon Sink Capacity as set out in Schedule 2. 

Climate Change means the long-term and material changes in global or regional weather and climate patterns including, temperature, humidity, precipitation, or wind. 

[Conservation Land means land on the Property designated to be managed exclusively or returned to its natural state [Drafting note: parties could amend this to manage such land in accordance with an agreed management plan] in order to achieve the Biodiversity Objectives [and identified coloured [ ] on the Plan]. 

Cross Compliance Conditions means the statutory management requirements and the standards for good agricultural and environmental condition of land listed in Regulation (EU) 1306/2013 and all associated delegated and implementing acts and laws and all subordinate legislation, guidance and codes of practice made from time to time under them and any replacement or similar additional conditions, requirements and standards and all legislation, guidance and codes of practice made from time to time under them by the UK government or any devolved authority applicable to the Property, in each case as amended, extended or re-enacted from time to time. 

Defra means the UK Department for Environment, Food and Rural Affairs (or any successor body in the case of a department restructuring).

Defra Biodiversity Metric means the metric designed by Defra and Natural England in the Biodiversity Metric 2.0: User Guide [from time to time] for assessing changes in biodiversity (losses or gains) resulting from development or land management change. 

Environmental Hazards  means any material, substance or organism which, alone or in combination with others, is capable of causing harm to the environment, including (but not limited to) radioactive substances[, OR and] materials containing asbestos[ and Invasive Non-Native Species].

Environmental Management Plan means a farm management plan to achieve Climate Benefits and reduce or mitigate Greenhouse Gas emissions. 

Expert means an independent surveyor with [seven] or more years’ post-qualification experience in agricultural land who is a Member or Fellow of the [RICS / CAAV / ALA] appointed in accordance with clause 6]. 

Force Majeure Event means any circumstance not within a party’s reasonable control including, without limitation, acts of God, flood, drought, fire, earthquake or other natural disaster.

Greenhouse Gas means gases that contribute to or accelerate the greenhouse effect by absorbing infrared radiation and that are specified in Annex A to the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC) or are otherwise so specified by the UNFCCC [at the date of this Lease/from time to time] and in particular Carbon Dioxide (CO2), Methane, (CH4) and Nitrous Oxide (N2O). 

Integrated Pest Management Plan means a plan which promotes integrated pest management in the holistic use of all available plant protection methods and the subsequent integration of appropriate measures to discourage the development of weed, pest and disease populations and which limits the use of pesticide and other interventions to levels that are economically and ecologically justified and minimise risks to human health and the environment. 

Invasive Non Native Species (INNS) or Invasive Alien Species (IAS) means species whose introduction and/or spread outside their natural past or present distribution threatens biological diversity including but not limited to those listed by Defra’s Guidance on Invasive non-native (alien) plant species published from time to time.

Native Trees means those species of trees which, since the last ice age, have grown in the geographic area now called the United Kingdom. 

Natural England means a non-departmental public body in the UK (or any successor body in the case of a restructuring) sponsored by Defra.

Nutrient Management Plan means a either a bespoke plan for managing the nutrient inputs to the Property or the version recommended by industry bodies and supported by the Environment Agency and The Department for Environment, Food and Rural Affairs (Defra).

Plan means the plan attached to this tenancy agreement

Property means the land [and buildings] at [DESCRIPTION / ADDRESS OF THE HOLDING] shown edged [red] on the Plan. 

 

Additional Clauses

1. Tenant’s Biodiversity covenants 

The Tenant covenants with the Landlord:

1.1 To farm the Property in accordance with the Biodiversity Objectives.

1.2 To create and implement and thereafter to comply with a Nutrient Management Plan to minimise the use of artificial fertilisers on the Property to help meet the Greenhouse Gas emissions targets set by Defra [from time to time] and reduce the damage to biodiversity that may otherwise be caused.

1.3 To manage land, water or livestock in a way that protects or improves the environment, or that mitigates climate change. 

1.4 To manage land and any water on the Property in a way that protects such land and water [and land and water neighbouring or in the vicinity of the Property] from Environmental Hazards. 

1.5 To cooperate with the Landlord in relation to any initiatives in connection with the Biodiversity Objectives [and in the creation, implementation of and compliance with an Environmental Management Plan]. 

1.6 To use all reasonable endeavours to minimise energy consumption, to use renewable energy sources, to recycle waste generated at the Property and to ensure  waste is disposed of responsibly. 

1.7 To allow the Landlord to have access to the Conservation Land at all reasonable times and on reasonable notice for the purpose of ensuring compliance with the Tenant’s covenants in this Lease. 

1.8 To create, implement and comply with an Integrated Pest Management Plan. 

1.9 To manage and cultivate the Property in compliance with the standards embodied in the aims of Section 1 of the AA 2020. 

1.10 To comply with all laws and government recommendations relating to the Property and the occupation and use of the Property by the Tenant, including any Cross Compliance Conditions. 

1.11 Not to do or omit to do anything which adversely affects the Biodiversity Objectives [or Conservation Land]. 

2. Landlord’s consent 

The Biodiversity Objectives specified in Schedule 1 (if any) shall be deemed to have been given with Landlord’s consent in writing and the Tenant shall be entitled to compensation in respect of such matters in accordance with Clause 4. 

3. Environmental Management Plan 

Prior to the commencement of this agreement, the [Landlord and/or Tenant] shall put in place an appropriate Environmental Management Plan that achieves the Biodiversity Objectives [including increasing the Carbon Sink Capacity of the Conservation Land]. 

4. Compensation 

4.1 At the end of the Term, or on sooner determination, the Landlord will pay to the Tenant, in addition to any compensation for Tenant’s Improvements pursuant to Part III of the Agricultural Tenancies Act 1995  (provided such compensation for Tenants Improvements does not already account for Climate Benefits): 

4.1.1 An amount equal to the valuation of the Climate Benefits as at the Term date (or date of determination as appropriate), [and any VAT in respect of it ], such valuation to be determined in accordance with Clause 5 [less [insert any relevant deductions to ensure that the Tenant is not double compensated for any actions undertaken in accordance with the Biodiversity Objectives]]. 

4.1.2 [All inputs [and any VAT] purchased for the purpose of Biodiversity Objectives]. 

5. Valuation 

5.1 The valuation of the Climate Benefits shall be: 

5.1.1 [Agreed in advance between the parties and set out in this clause]. 

5.1.2 [Valued in accordance with the Defra Biodiversity Metric]. 

5.1.3 [The amount of the valuation shall be [assessed by the Landlord’s Agent whose decision shall be final and binding on the parties OR agreed by the Landlord’s Agent and the Tenant’s Agent and, if not agreed within two weeks after the end of the term, shall be determined by an Expert appointed in accordance with clause 6]. 

5.2 The Landlord shall pay the valuation of the Climate Benefits in full to the Tenant at the end of the term or within [seven] days of it being determined (whichever is the later) and, if not paid on that date, the Landlord shall in addition pay interest on that amount at the [Contract Rate [ %] ] for the period from and including that date to and including the date of actual payment. 

5.3 [Where a grant has been made or will be made to the Tenant out of public money [or a payment made by any third party] in respect of the Climate Benefits the amount of compensation payable by the Landlord shall be reduced by the proportion by which the amount of the grant [or payment] bears to the total cost of providing the improvement.] 

6. Dispute 

6.1 In the event of a dispute between the parties concerning the construction or effect of this [clause], either party may refer the dispute to the Expert [Drafting note: It is assumed that this term will already be defined in the Farm Business Tenancy], who will act as an independent expert and not as an arbitrator and will be appointed on the joint written application of both parties or the written application of either party. 

6.2 The appointment of the Expert will specify that their decision will be made following the representations in writing by the parties. The costs of the Expert will be borne as directed by the Expert. 

7. Non assignment 

The rights and obligations of the parties under this agreement are personal to the parties (or their personal representatives) and may not be assigned, transferred, mortgaged charged or otherwise disposed of. 

8. Records 

8.1 The Tenant shall keep such records and accounts in respect of the Biodiversity Objectives and Climate Benefits as may be required by the Landlord or their managing agents with sufficient details so that all compensation and grants payable to the Tenant under this agreement and any statute or statutory or local regulations or bye-laws or otherwise may be readily determined and generally so that the right of the Tenant to compensation in accordance with Clause 4 may be accurately ascertained. 

8.2 The parties agree to attend regular meetings (at least once every [X] months) with the other  to consider and discuss the Tenant’s  plan and current progress towards achieving the Biodiversity Objectives.

9. Force Majeure 

9.1 Provided it has complied with this clause, if the Tenant is prevented, hindered or delayed in or from performing any of its obligations under this agreement by a Force Majeure Event the Tenant shall not be in breach of [this agreement / clauses [X] to [X]] or otherwise liable for any such failure or delay in the performance of such obligations. 

9.2 The Tenant shall as soon as reasonably practicable after the start of the Force Majeure Event [but no later than [NUMBER] days from its start], notify the Landlord [in writing] of the Force Majeure Event, the date on which it started, its likely or potential duration, and the effect of the Force Majeure Event on its ability to perform any of its obligations under the agreement. 

9.3 The Tenant shall use all reasonable endeavours to mitigate the effect of the Force Majeure Event on the performance of its obligations. 

Schedule 1 

Biodiversity Objectives 

[Set out any requirements relevant to the property as agreed between the parties which will vary in accordance with the type of farming, the typography of the Property, the length of the term, and the permitted use of the farm business tenancy.] 

  1.  Ensure sustainable and responsible plant protection product use/ develop an Integrated Pest Management Plan. 
  2.  Maintain existing woodland with broad based leaves trees native to the particular terrain. 
  3.  Promote and enhance habitats for farmland wildlife species. 
  4.  Protect and promote populations of Native Trees on the farm. 
  5. Promote pollinators by creating good quality, wildflower rich habitats [in accordance with the National Pollinator Strategy, its implementation plans as amended from time to time [and advice from its implementing partners]].
  6. Where appropriate, follow the independent guidance on sustainable environmental management on farm e.g. the Championing the Farmed Environment partnership
  7. Identify and protect carbon stores and potential Carbon Sequestration opportunities on the land. 
  8. Act with all good faith to seek to achieve the Biodiversity Objectives. 

Schedule 2 

Climate Benefits 

[Set out any agreed Climate Benefits as agreed between the parties such as areas that have Carbon Sink Capacity, areas of tree planting for Carbon Sequestration or the promotion of soil quality. This will be bespoke to the Property and will vary according to the topography of the land, such as whether it is upland or lowland and current type of wildlife and biodiversity viable in the area.]

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