You may be asking yourself – why should I read another article on green leases?
The answer is simple – adapting commercial leases to "green" is likely the most important development in commercial leasing in recent memory. This article will provide you with a snapshot of what landlords and tenants need to know when adopting a green lease.
While energy reduction and sustainability goals are not new, the pressure to adopt green initiatives and standards in the real estate sector has never been greater. Across the country Canadians are implementing sustainability practices to reduce their carbon emission, energy consumption and energy waste. In fact, the Canadian government is aiming to become a net zero economy by 2050 and to increase energy efficiency so that by 2025 buildings are using 47 per cent less energy than in 2019.
Today's commercial leases are being redefined to reflect this evolving legal and social discourse. However, what "makes" a green lease is not widely understood.
4 key elements of green leases
1. Clear energy objectives: Green leases establish clear measurable objectives. Parties set out their targets, benchmarks, sustainability and energy conservation provisions. These objectives may be based on achieving accreditation and certification such as LEED, Energy Star, BOMA, or Green Lease Leaders. They may be driven by the Landlord and be building specific, or by the Tenant in accordance with its corporate requirements.
2. Improved operations:
- Energy efficiency and indoor air quality: The goal of these
leases is to improve and reduce energy usage. This can be
accomplished by mandatory energy
efficient lighting controls, prohibited use of space heaters, reduced light pollution with light directed downward, use of solar and other renewable energy, and enhanced ventilation and filtration systems for better air quality. - Regulated waste production: Green leases may mandate the use of
recycling and composting systems, provide incentives for tenants to
reduce waste, require landlord to offer recycling and composting
facilities,
and require the monitoring and reporting of usage to ensure compliance. - Sustainable equipment, materials and resources: Parties are
typically required to use sustainable materials for construction
projects, alterations, repairs and maintenance, and are prohibited
from using
noxious and toxic cleaning substances.
3. Monitoring: Provisions may require mandatory data collection and reporting to track energy and water consumption and operations against the objectives. Sensitive information is managed by confidentiality and anonymous reporting.
4. Cost management: "Green" costs promote an overall goal of long-term reduction of costs with improved operations for all parties.
Green leases are here to stay – they enable long term cost
reduction, decrease negative impact on our environment, and build a
socially responsible brand. This is just the tip of the iceberg:
stay tuned for our next article on the future of smart buildings
and their impact on commercial leasing.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.