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.
Encourages landowners to realise the long term value to land when letting on short term lets. The clause helps add value to land and the environment, and opens up opportunities to use land for biodiversity, off-setting projects and higher level Environmental Land Management Schemes.
[Drafting note: Capitalised terms relate to either a defined term in this clause or a defined term in the main agreement that this clause is designed to be inserted into.]
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, implement and thereafter comply with a Nutrient Management Plan to:
1.2.1 minimise the use of artificial fertilisers on the Property to help meet the GHG emissions targets set by Defra [from time to time]; and
1.2.2 reduce the damage to biodiversity that may otherwise be caused.
[Drafting note: The nutrient management plan can either be bespoke to the property or can be the version as recommended by industry bodies and supported by the Environment Agency and The Department for Environment, Food and Rural Affairs (DEFRA), see Nutrient Management Plan.]
1.3 To manage land, water or livestock in a way that protects or improves the environment, or 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 connected with:
1.5.1 the Biodiversity Objectives[; and
1.5.2 the creation, implementation of and compliance with an Environmental Management Plan].
1.6 To use all reasonable endeavours to:
1.6.1 minimise energy consumption;
1.6.2 use renewable energy sources;
1.6.3 to recycle waste generated at the Property; and
1.6.4 to ensure that waste is disposed of responsibly.
1.7 To allow the Landlord to access the Conservation Land at all reasonable times and on reasonable notice to ensure that the Tenant is complying with the covenants in this Agreement.
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 the Landlord's consent in writing. The Tenant shall be entitled to compensation in respect of such matters in accordance with Clause 4.
3. Environmental management plan
Before the commencement date 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 sooner if the Agreement ends earlier than the Term), the Landlord will pay the Tenant:
4.1.1 an amount equal to the valuation of the Climate Benefits as at the end date of the Term (or date of determination as appropriate), [and any VAT in respect of it ]. The valuation shall 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]]. [Drafting note: For example, if the Tenant signed up to a Countryside Stewardship Scheme or Woodland Grant Scheme and received payments for providing these, they ought not to be compensated for this by the Landlord as well or they would be compensated twice.]
4.1.2 [All inputs [and any VAT] purchased for the purpose of Biodiversity Objectives].
4.2 In addition to any compensation the Tenant may be entitled to under clause [4.1], the Tenant is also entitled to 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).
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 amount of 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). If the valuation amount is 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.]
* [Drafting note: Given the development of some schemes with organisations that are not granting “public money”, for example, water companies, it may be appropriate to amend this clause to reduce the compensation by the amount of such third party payment as well.]
6. Dispute
6.1 If there is 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]. The Expert 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 the Expert’s decision will be made following the written representations of the parties.
6.3 The costs of the Expert will be borne by the parties as directed by the Expert.
7. Non assignment
The rights and obligations of the parties under this Agreement are personal to them (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 its managing agents so that:
8.1.1 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
8.1.2 any compensation payable to the Tenant under clause 4 may be accurately ascertained.
8.2 The parties agree to attend regular meetings (at least once every [●] 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 [●] to [●]] 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 [●] 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. These will need to be adjusted so they are suitable for the type of farming, local typography, 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 (NPS), NPS’ implementation plans as amended periodically [and advice from NPS’ implementing partners [Drafting note: Such as Landscapes for Wild Pollinators and Farm Wildlife Project and Bumblebee Conservation Trust]]].
6. Where appropriate, follow the independent guidance on sustainable environmental management on farm (for example the Championing the Farmed Environment partnership).
7. Identify and protect carbon stores and Carbon Sequestration opportunities on the land.
8. Act in good faith to achieve the biodiversity objectives listed in this Schedule and otherwise defined in the Agreement.
Schedule 2: Climate Benefits
[Set out any agreed climate benefits as agreed between the parties. These might include areas of the Property:
The climate benefits listed here will need to be tailored to each Property and will vary according to local topography (upland or lowland), and the wildlife and biodiversity that is viable in the area.]
AA 2020 means the Agriculture Act 2020 and implementing acts and laws and all subordinate legislation, guidance and codes of practice made periodically under them and any similar replacement or similar additional conditions, requirements and standards and all legislation, guidance and codes of practice made from periodically 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. This includes:
(a) conserving ecosystems and natural habitats;
(b) maintaining and helping the recovery of viable populations of species in their natural surroundings;
(c) in the case of domesticated or cultivated species, supporting their continued existence; and
(d) the matters in Schedule 1 (Biodiversity Objectives).
Carbon Sequestration means the process by which carbon sinks remove carbon dioxide from the atmosphere. This process occurs:
(a) naturally via the storage of carbon in plants, soils, geological formations and the oceans; and
(b) 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 Benefits).
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 in order to achieve the Biodiversity Objectives [and identified coloured [●] on the Plan]. [Drafting note: Parties could amend this to manage such land in accordance with an agreed management 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 periodically under them and any replacement or similar additional conditions, requirements and standards and all legislation, guidance and codes of practice made from periodically under them by the UK government or any devolved authority applicable to the Property, in each case as amended, extended or re-enacted periodically.
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 3.1: 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 radioactive substances[,][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 GHG 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 Gases (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 in Annex A to the Kyoto Protocol and may be updated periodically.
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 those listed by Defra’s Guidance on Invasive non-native (alien) plant species* published from time to time.
* [Great Britain Invasive Non-native Species Strategy 2015, which refers to the definition of Invasive Alien Species under the Convention on Biological Diversity (CBD). This is the definition from the CBD: Glossary of Terms).]
** [UK Gov, Invasive non-native (alien) plant species: rules in England and Wales.]
Integrated Pest Management Plan means a plan which:
(a) 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
(b) limits the use of pesticide and other interventions to levels that are economically and ecologically justified and minimises risks to human health and the environment.
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) a bespoke plan for managing the nutrient inputs to the Property; or
(b) the version of the plan recommended by industry bodies and supported by the Environment Agency and Defra. [Drafting note: See Nutrient Management Plan.]
Plan means the plan attached to this Agreement.
Property means the land [and buildings] at [DESCRIPTION/ ADDRESS OF THE HOLDING] shown edged [red] on the Plan.
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