Why should you look into green leases?

In the context of the fight against climate change, important steps are being taken (such as the net zero carbonisation commitment and the increasing implementation of ESG criteria) to promote environmental sustainability within the real estate sector. Businesses, especially large-scale businesses, are progressively committing to achieving environmental goals and adhering to eco-friendly policies. This is driven partially by a desire to reduce their environmental footprint, but also by EU regulations such as the EU Taxonomy Regulation.

Possible examples include arrangements on the use of renewable energy sources, waste management, environmental certification (such as BREEAM), structural alterations (construction and maintenance), costs sharing and data sharing. Since there is no common European framework on green clauses, the drafting of such clauses is entirely dependent on the specifics of each individual case.

A key issue when drafting green clauses is enforceability. Lease agreements might contain obligations for the parties or simply best effort commitments. As such, these clauses can be divided into two groups: “dark green clauses” which are legally binding and whose scope goes further than just energy efficiency and “light green clauses” which usually contain best effort commitments or limited obligations.