The Irish Property Working Group has adapted several of TCLP’s green lease clauses for use in Ireland. The Group is a pioneering collaboration of lawyers from several firms across Ireland and the Landlord and Tenant Task Force of the Conveyancing Committee of The Law Society of Ireland.
The Three New Clauses
These clauses should be treated as a menu from which landlords and tenants can select the clauses most suitable for their premises. The clauses are written primarily for a lease of new office premises within a multi-let building where the tenants contribute to common area maintenance via a service charge.
Incorporating Circular Economy and Sustainability Principles into a Service Charge Regime, Landlord’s Regulations and Landlord’s Works
- As repair and obligation lease terms often require the use of new products, unnecessary waste is created by throwing away good condition second-hand goods capable of re-use. As a result, more GHG Emissions are created both in the production of these new materials and in the release of GHG emissions at landfill of the old materials.
- This green lease clause is intended to promote better environmental performance and energy efficiency of buildings, which may lead to reduced utility bills and other benefits for tenants.
Relating to (1) Sustainable and Circular Economy Principles in Repair and Alteration Covenants, (2) Rent Review Assumptions, and (3) Protecting Energy and Sustainability Ratings
- Increasingly, buildings may be built in a sustainable way using sustainable materials. However, the way they are operated by owners/ occupiers can erode the initial design intent and carbon savings. These clauses encourage circular economy principles and improved environmental performance through more landlord and tenant collaboration.
Promoting Co-operation Between Landlords and Tenants Concerning The Environmental Performance of Buildings
- These clauses can be used in commercial leases between owners/ landlords and occupiers/ tenants in Ireland.
- The clauses oblige landlords and tenants to use reasonable endeavours to identify appropriate strategies to improve the environmental performance of buildings. This includes implementing an environmental performance plan, managing waste and sharing data.
Buildings account for 40% of energy consumed and 36% of energy-related direct and indirect GHG emissions in the EU. Carbon emissions associated with the construction, buildings, and infrastructure sectors account for approximately one third of Ireland’s emissions.
A green lease can do more than reduce a building’s carbon footprint and futureproof owners/ occupiers against the transition risk of incoming regulation. It could also improve a business’ reputation in the market, enhance the wellbeing of the building’s occupants and attract talent drawn by climate-conscious values.
- For occupiers/ tenants, there are potential cost savings through improved energy efficiency across building management, services and utilities, which may also further their own sustainability commitments or ESG policies.
- For owners/ landlords, energy-efficient buildings could be more likely to attract prospective tenants (who will benefit from the cost savings above) and might therefore command higher rents and/or sale prices.
While some of the clauses are innovative, green lease clauses are increasingly being used by:
- domestic and international occupiers and investors who want LEED certified buildings, and
- large institutional landlords and tenants, to help them achieve their corporate ESG targets.
These clauses help to future-proof buildings and leases by incorporating circular economy and sustainability principles in anticipation of increased environmental regulations.
The Irish Property Working Group considered the following clauses, which inspired and informed this suite of clauses:
- Clauses contributed by the law firms participating in the Irish Property Working Group
- [Aatmay’s Clause] Sustainable and Circular Economy Principles for Leasing Arrangements for Repairs and Alterations (England & Wales);
- [Rosie’s Clause] Alteration/ Improvement Provisions in Leases to Improve Climate/ Environmental Impact of Buildings and Better Use of Shared Space (England & Wales)
- The Building Better Partnership’s Green Lease Toolkit; and
- Green Lease Schedules published by the Department of Climate Change and Energy Efficiency, Australian Government.
Selected principles and drafting from these clauses have been adapted for the Irish market.
Join your Local Transpositions Group
To join your local transpositions group and adapt climate clauses for your jurisdiction, please apply here.