Lots of companies now have established ESGand sustainability objectives, but not many understand how their real estate has a bearing on this or how inserting some simple Environmental Performance (EP) clauses into their leases could help them to meet their objectives.
Many stakeholders in the real estate sector are wary of green leases, and this is understandable as few are subject matter experts on environmental issues. The assumption is that green leases are complicated documents and far removed from the traditional leases that landlords and tenants are familiar with. However, a so-called ‘green lease’ isn’t radically different from a traditional lease. In fact, it has all the common characteristics of a regular lease but with some additional Environmental Performance clauses included. In a nutshell, a green lease is essentially a regular lease with some additional clauses that stipulate how the building is to be occupied, operated, and managed in the most efficient and sustainable manner.
In addition to protecting the landlord’s investment, the purpose of inserting EP clauses into leases is to collaboratively align landlords and tenants’ interests, ensuring that the buildings operate as efficiently and sustainably as possible for the mutual benefit of both parties.
As sustainability has increased in importance over the last decade in particular, all real estate stakeholders including developers, landlords, occupiers, investors, and their various advisors have a role to play in reducing carbon emissions in the built environment. As regulation becomes ever more stringent, this is going to become even more onerous, and we can expect to see the insertion of EP clauses into leases becoming the rule as opposed to the exception. Indeed, this is already the case in some countries such as France, where certain EP clauses are mandatory in large commercial leases.
From a landlord’s perspective, the principal aim is to ensure that the tenant’s occupation, use and fit-out does not impact negatively on the building’s sustainability score or performance rating. They will also want to ensure that any facilities put in place are not undermined by the occupier’s inability or unwillingness to utilise the technologies or systems provided and that the building is performing as efficiently and sustainably as possible. The core aim is to protect the investment value of the building. ActiveScore certification can help your business or building meet its Environmental, Social and Governance (ESG) targets. It assures both landlords and tenants that their building has reached a certain standard. For real estate agents and brokers, it communicates the benefits of an asset in a clear and repeatable way.
From a tenant’s perspective, in addition to meeting their own ESG and sustainability objectives, accepting EP clauses can potentially lower utility and operating costs over the term of the lease. Another benefit is that the quality of the building and its sustainability features could help with employee attraction and retention. Occupying a building that is operating efficiently and sustainably can also help with the wellbeing and productivity of employees within the building. To further improve the ESG standard of a building, European-standard Cycle-friendly employer accreditation can be attained by tenants. As a CFE member, you have access to a range of programmes and support initiatives to make your sustainable and active travel strategies a success.
To see what Active Score certification and Cycle-friendly employer certification would mean for you, check out https://activetravelscore.us/get-certified/ and https://www.cyclingsolutionsireland.ie/self-evaluation/ today.