green lease workings
Green lease is not a term of art. Thinking about a green lease as a specific type of document or as an industry standard is misleading. In fact, green lease provisions do not even need to be in a lease: anecdotal evidence suggests that the format in which they are currently most acceptable to tenants is within a Memorandum of Understanding, which sits outside the lease.
Green lease clauses are often roughly divided into "light green", "medium green" and "dark green". The shades of green reflect the wide range of different types of green lease provision that might be used, whether they are legally binding or not, and the extent of the burden they place upon the parties. This terminology reflects the spectrum of clauses that can be used. There is no specific cut-off point where a lease stops being light green and becomes medium green.
Light green clauses are likely:
Not to be legally binding.
To require a limited commitment to environmental issues (for example, that the tenant do nothing which might prejudice the energy performance of the premises).
To be limited to improving energy efficiency.
Dark green clauses are likely to:
Be legally binding (although breach would not result in forfeiture of the lease, but is more likely to be dealt with by alternative dispute resolution).
Require a more significant level of commitment to environmental issues (for example, that the landlord and tenant achieve specified energy efficiency targets or waste targets).
There are several different ways of greening the relationship between landlord and tenant, depending on what the parties are seeking to achieve, the age and type of the building, and the shade of green required. Possibilities are:
Green clauses within the actual lease: These will be legally binding and can be incorporated into a new lease or at renewal. However, different remedies for breach will apply than to the rest of the lease as forfeiture of the lease would be too draconian a remedy for breach of green lease provisions.
Green obligations in the tenant regulations, estate regulations or an environmental handbook: Note that although these are in a separate document from the lease, they will still be legally binding if they are incorporated in the lease by reference (which they often are). There is unlikely to be much scope for tenants to negotiate the terms of these. Again, there are likely to be modified remedies for breach.
A requirement in the lease or in tenant regulations for the tenant to comply with an environmental policy for the building: This would comprise broad, aspirational, non-binding environmental principles, and would not be negotiable. It is usually difficult to demonstrate that an environmental policy has not been complied with, precisely because of the general terms in which they are expressed. Nonetheless, remedies for breach should be modified.
Memorandum of Understanding: A Memorandum of Understanding (MoU) can be more flexible than clauses within a lease or in tenant regulations. It is likely to be voluntary rather than legally binding. An MoU will usually not run with the lease so if a new landlord, tenant or sub-tenant comes on the scene, the parties will need to enter into a new MoU. At the moment, this is the approach that is likely to be most attractive to tenants.
In practice, you might use a combination of several of these approaches, depending on the circumstances and the positions of the parties. The obligations themselves could be worded as broad principles, or as requirements for specific actions. Again, this will depend on the circumstances.