As part of the Built Environment focus on Environmental Social and Governance (ESG) factors, we, along with our clients, are looking ever more closely at contracts from a sustainability perspective. This includes property contracts and leases.
The wording of such contracts and leases is being considered and negotiated in a bid to encourage and enhance the environmental performance of buildings and to futureproof against ever increasing regulation in the area. In that context, green leases are becoming increasingly important. Green leases are leases incorporating clauses which promote the sustainable operation and management of buildings.
The Chancery Lane Project (TCLP) has published a suite of green lease clauses for use in commercial leases in Ireland. TCLP is a collaboration of lawyers from around the world, working pro bono to develop new contract provisions to help fight climate change. Mason Hayes & Curran LLP, together with Arthur Cox LLP and ByrneWallace LLP, spearheaded the development of this suite of green lease clauses by the Irish Property Working Group of TCLP. The group includes other law firms and members of the Law Society Conveyancing Committee Landlord and Tenant Task Force.
The suite of clauses is divided into three sets:
- clauses promoting co-operation between landlords and tenants in relation to the environmental performance of buildings (Odhran’s Clause);
- repair and alteration covenants, rent review assumptions and covenants for the protection of energy and sustainability ratings (Emily & Tom’s Clause); and
- clauses incorporating circular economy and sustainability principles into a service charge regime, landlord’s regulations and landlord’s works (Amélie & Lauri’s Clause).
TCLP clauses are named after children, recognising that our actions to combat the climate crisis will benefit future generations.
The clauses are drafted primarily for use in leases of new office premises in a multi-let building where the tenants contribute to the maintenance of the building common areas via a service charge regime. Some of the clauses may be suitable for use in leases of other types of premises. The clauses should be treated as a menu from which landlords and tenants, working with their solicitors and other professional advisors, can select and tailor clauses that are suitable for their premises and their sustainability goals.
We have advised landlords, tech companies and other occupiers on some of the largest office leasing deals in Ireland in recent years, including advice on, and the negotiation of, green lease provisions. We continue to advise our clients on the ever changing and complex ESG landscape, including advice as to how real estate contracts can be adapted in order to achieve sustainability objectives.