Are you a landlord, investor or lender who makes ‘greener’ choices personally? Do you conscientiously recycle, support sustainable brands or seek to limit carbon emissions? If so, have you thought about the positive impact you could have by making some changes in your requirements for, or the way you operate, your commercial properties?
Buildings and their occupiers are significant contributors to the UK’s energy and water consumption and waste generation, from construction or refurbishment to fit out, alterations and actual occupation. The UK built environment accounts for 25% of the country’s greenhouse gas emissions so substantial carbon reductions could be made if every owner, lender or occupier considered their property portfolio as part of their ESG strategy. So, what can you do in practice to work towards combatting the climate crisis and achieving net zero targets?
Landlords and investors can seek to impose ‘green’ obligations on tenants and lenders may require green leases as part of the conditions of lending. Whilst it is increasingly common for landlords to issue leases containing green provisions, tenants may resist these on the basis that such provisions are overkill and create unreasonable and unaffordable obligations on a tenant. As an alternative to including these provisions in a lease, landlords may consider preparing a ‘sustainability plan’ or ‘memorandum of understanding’ (MoU) which is separate from the lease and could form part of centre regulations or a retail guide that tenants must comply with.
A sustainability plan can be amended from time to time to offer flexibility as Government or sustainability requirements evolve.
Alternatively, under an MoU, the landlord and tenant enter into an agreement, setting out how they will work together to improve and manage the building’s environmental performance. As a result, both landlord and tenant will have a clear understanding of their respective obligations and common purpose.
‘Green’ provisions in a lease, sustainability plan or MoU may include:
Green leases, MoUs and sustainability plans may appear on the surface to have marginal impact on our fight against the climate crisis, but if everyone in the commercial property sector takes responsibility by doing what they can, we will collectively be able to make a positive impact in saving and protecting the planet.
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