Members of the PSG were pleased to be involved in producing a Scottish version of the Better Building Partnership (BBP) green lease toolkit which has recently been updated. The toolkit provides a suite of green lease clauses and broad statements of intent setting out the aims of each clause. The Scottish version of the toolkit is compatible with the PSG leases and is available on the BBP website here.
The toolkit includes what the BBP considers to be 10 “green lease essentials” for a commercial property lease to credibly be called a green lease. While the BBP is not a standard setting body, the purpose of the essentials is to encourage the industry to move beyond the most basic green lease provisions, increase ambition and collaboration between owners and occupiers, and for the essentials to become an accepted industry norm for the “greenness” of leases.
The toolkit was last updated in 2013 but is now designed to be a ‘live’ document that will be updated periodically to keep pace with the increasing sustainability agenda.
While the updated toolkit builds on what was contained in the 2013 toolkit, it also introduces new clauses which shift the toolkit from being one that was mainly designed to protect the existing levels of the environmental performance of let buildings to one that encourages legal commitments to be entered into to improve aspects of the environmental performance of such buildings.
This shift is important if we are to meet the UK’s 2030 Paris Agreement target.
The new clauses cover the treatment of waste generated by the owner and occupier, and the use of sustainable materials in works by either party, in recognition of the increased importance of embodied carbon and related circular economy principles.
There is also a new clause related to sustainable use by both the landlord and tenant which seeks to drive behavioural change in the use of energy and water and the proper use of building systems to ensure optimisation of the environmental performance of the building. Earlier this month, the UK Green Building Council published its report on the case for retrofitting office buildings, which found that optimisation alone on average resulted in a 26% reduction in the operational energy use intensity of offices.
Renewably generated electricity procurement is covered in another new clause, a change that moves the toolkit beyond focusing merely on energy efficiency to, for the first time, expressly looking at the decarbonisation of energy sources in buildings.
The toolkit also, for the first time, contains drafting concerning social impact.
The toolkit contains extensive drafting of lease clauses covering the topic areas of the toolkit with narrative introductions to each clause and drafting notes. To show how the clauses would fit within a typical commercial lease, a version of the widely used Model Commercial Lease precedents has been used as the base document with separate versions for Scotland (based on the PSG leases) and Northern Ireland.
Central to the toolkit is the notion of improving “environmental performance”. The term has been redefined in the updated toolkit to extend its application beyond energy and water use, waste generation and greenhouse gas emissions, to biodiversity and resilience too.
One area the toolkit does not address with draft clauses is the issue of the costs of any works by a landlord to improve the environmental performance of the premises or the building. However, the toolkit supports the principle that tenants should contribute to the cost of those improvements to the extent that they result in savings for the tenant – and cites examples of drafting in the US and Australia which seeks to implement this principle.
The toolkit does include draft heads of terms – high-level, upfront wording that landlords and tenants can agree to set the direction for further negotiation on the main terms of their lease agreement. The BBP have said: “The heads of terms stage of a negotiation is a key moment to communicate the importance and ambition of green provisions in the lease.”