How do green leases work?

Green leases help us collaborate with occupiers to drive down emissions.

Within Grosvenor’s London portfolio, occupiers account for more than 90% of operational emissions from buildings. Whilst as a business we have committed to reaching net zero by 2040 and published our net zero carbon pathway, we simply cannot do this alone, we have to take a partnership approach.

One important element of this partnership is green leases. A green lease is an agreement made between occupiers and property owners to increase transparency, consolidate services and accelerate innovation.

According to Dr Kathryn Janda from the Environmental Change Institute at the University of Oxford “Green leasing is a promising tool that tenants and landlords can use to develop joint environmental actions”. Whilst these leases are becoming increasingly prevalent in the UK market, they are still not commonplace, vary in their ambition and are not always effectively implemented.

One reason for that is their complexity. It isn’t as straightforward as just signing all occupiers up to green clauses and mandating more environmental behaviours or greater energy efficiency.

When developing green leases for occupiers we focussed on three principles to ensure they were both attractive and delivered tangible environmental outcomes.

Firstly, going green must be both easy and cost-effective. It isn’t enough to simply demand green behaviours. We must provide the means and opportunities for tenants to behave sustainably with minimal or lower cost implications for their business.

Green energy is a perfect example. Many property owners are uniquely placed to leverage their size to procure green energy at lower and less volatile prices for occupiers, helping them drive down CO2 emissions whilst also improving cost efficiencies.

Secondly, green clauses must be collaborative. They need to include commitments from both parties. For example, agreeing to share environmental data to help property owners improve the energy efficiency as well as enable occupiers to use their buildings more sustainably.

We are installing smart meters in many of our buildings so we can act on this data together with occupiers to retrofit low EPC rated buildings and provide advice on how they can save energy themselves.

Finally, green clauses should facilitate an ongoing dialogue between occupier and property owner on environmental topics.

We don’t always know best, and we need to listen and learn from our occupiers (we have over 1,000) as well as enable conversations within the communities that we operate.

By sharing knowledge through forums, we can significantly advance the sustainability agenda not only in London but across the UK and globally, by learning from and influencing those whose businesses have a national or global footprint.

Going green should be easy, cost-effective, collaborative and enable ongoing dialogue. These are all essential elements of our evolving environmental approach. We are still at the beginning of our journey,

but we are seeing great things already. And green leases form just one part of our strategy of collaborating more closely with tenants on green issues.

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