What's greener than a green building? A green building with green occupants. This update explores how green leases may facilitate cooperation between landlords and tenants to achieve common environmental goals.

The Carbon Pricing Act ("CPA"), a tax on greenhouse gases emitted beyond a prescribed threshold, came into force in January this year.1 This was followed in September by the enactment of the Resource Sustainability Act ("RSA").2 When it comes into force, the RSA will, amongst other things, prohibit an occupier of a prescribed building from disposing within the premises any food waste generated in the building in any place other than a facility provided by the building manager for the separate disposal of food waste; or disposing within the building any food waste mixed with any other type of waste.3 The RSA will further require the building manager of a prescribed building to provide within the premises on which the building is situated, a facility to enable occupiers of the building to dispose food waste separately from other types of waste.4 If the prescribed building is a new building, the building manager must further cause all food waste disposed of in such a facility to be treated in the building. Where the prescribed building is not a new building, the building manager can either cause the food waste to be treated in the building or within the premises on which the building is situated; or engage a licensed waste collector to send the food waste for treatment at a licensed waste disposal facility.5

Laws such as the CPA and RSA prod landlords and tenants to work together to reduce respectively, the carbon and resource footprint associated with the occupation of leased properties. Beyond passively reacting to changes to the law, landlords and tenants can proactively explore opportunities to collaborate on a more holistic approach to achieving mutually beneficial environmental goals and an equitable alignment of the associated financial costs and benefits.6

What is a Green Lease?

A green lease contains covenants between a landlord and a tenant as to how the leased premises or the building in which the premises are located is to be occupied, operated, and managed in a sustainable way. Green leases are important complements to the green design of buildings in improving the environmental performance of buildings because the actual performance of a building is often influenced by the behaviour of its occupants, green design notwithstanding. Structural elements commonly found in a green lease include, an agreed environmental management plan which provides for the tracking and sharing of environmental performance data for achieving specified targets, and the setting up of a joint committee to cooperate on the implementation of the environmental management plan. Depending on the nature of the property and the lease involved,7 and on the parties' level of ambition, substantive obligations may include complying with agreed standards for energy efficiency, water efficiency, waste (including food waste, wastes from fitting-out works8) minimisation and recycling, and indoor air quality.9 Other environmental measures that may be addressed include, reducing greenhouse gas emissions and facilitating sustainable transport.10

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1 See our Client Update, "An Overview of the Carbon Pricing Regime in Singapore", (January 2019), https://www.shooklin.com/images/publications/2019/January/An-Overview-of-the-Carbon-Pricing-Regime-in-Singapore.pdf

2 See our Client Update, "The Resource Sustainability Bill – Are We Going in Circles?" (August 2019), https://www.shooklin.com/images/publications/2019/August/The-Resource-Sustainability-Bill-Are-We-Going-in-Circles.pdf

3 RSA s 25.

4 RSA s 26.

5 RSA s 27.

6 See for example, Michael Long, "Giving Food Waste a New Lease of Life", (22 January 2019) The Business Times.

7 Considerations include whether the lease is gross or net utility costs, the scope for environmental improvement and costs involved, whether the property is single- or multi-tenanted, and the tenure of the lease.

8 See The Fifth Estate, "NZ's Circular Economy Model Office Project Tackling Fitout Churn", (5 June 2015) Eco-Business.

9 See for example, the Building Control Authority, "Office Green Schedule 2014", http://www.bca.gov.sg/GreenMark/others/Office_Green_Schedule.docx; and Building Control Authority, "Retail Green Schedule 2014", http://www.bca.gov.sg/GreenMark/others/Retail_Green_Schedule.docx .

10 See Real Property Association of Canada, Green Lease Guide for Commercial Office Tenants (January 2010); Council of Australian Governments National Strategy on Energy Efficiency, The Green Lease Handbook (September 2012).

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.