Co-operation Provision
Statement of Intent
The Lease contains a co-operation provision which sets out the shared aim of the parties to improve the Environmental Performance [and Social Impact] of the Premises and the Building and their agreement to cooperate to achieve this. (Note: Environmental Performance extended to include biodiversity and resilience).
Preamble
The success of a green lease relies as much upon the actual co-operation between the parties or their representatives as the existence of strict legal obligations. Setting out the shared aim of the parties to improve the Environmental Performance and, where included, the Social Impact of the Premises [or the Building] may assist by:
- setting the tone and, in respect of Environmental Performance, reflecting what is already market standard;
- where more detailed/onerous green lease or equivalent clauses prove unacceptable, providing a lightweight minimum regime within which the parties can raise issues and foster discussion about environmental sustainability and, where included, Social Impact issues; and
- providing a background against which to consider the validity and recoverability of costs incurred in achieving environmental sustainability and Social Impact objectives as well as the validity of the grant or withholding of consent to works (which may be required by other clauses in the Lease).
The very essence of co-operation obligations means that they should avoid compulsion, but the following versions of this clause reflect increasing degrees of stringency and focus. The need to avoid compulsion means that this clause does not include any legal obligation to implement any strategies or initiatives arrived at. This lack of compulsion doesn’t stop the parties from implementing any strategy or initiative which the parties consider to be appropriate, but they will need to have reached a binding agreement on matters such as who will carry out the works and how the costs will be dealt with. Equally, if the parties want to have specific obligations to carry out works, where works are already agreed as part of the lease negotiations, this will need to be separately drafted whether in agreement for lease or in the lease.
Gearing up for your Green Lease Journey
Light Green Clause:
Accelerating your Green Lease Journey
Medium Green Clause:
Driving Transformation with your Green Lease Journey
Dark Green Clause:
Suggested drafting
Light Green Clause
The Landlord and the Tenant:
- (a) confirm that wherever reasonably practicable they intend to promote and improve the Environmental Performance [and Social Impact ] of the Premises [and the Building]; and
- (b) agree in good faith, but without legal obligation, to co-operate with each other to identify appropriate strategies and initiatives to improve the Environmental Performance [and Social Impact ] of the Premises [and the Building].
Medium Green Clause
The Landlord and the Tenant:
(a) confirm that they intend to improve the Environmental Performance [and Social Impact ] of the Premises [and the Building];
(b) must in good faith co-operate with each other to identify appropriate strategies and initiatives to improve the Environmental Performance [or Social Impact ] of the Premises [and the Building]. Nothing in this clause [ ] is intended to impose an unreasonable economic burden on the parties, or require the parties to agree to terms which are adverse to their business interests; and
(c) must consider any reasonably detailed written proposal made by the other for any measures which are likely to improve the Environmental Performance [or Social Impact ] of the Premises [and the Building].
Dark Green Clause
The Landlord and the Tenant:
- (a) confirm that they intend to improve the Environmental Performance [and Social Impact ] of the Premises [and the Building];
- (b) must co-operate with each other to identify appropriate strategies and initiatives to improve the Environmental Performance [and Social Impact ] of the Premises [and the Building] with a view to achieving at least a [X] % reduction of Greenhouse Gas Emissions year on year from the Premises [and the Building];
- (c) where they identify appropriate strategies and initiatives to improve the Environmental Performance [and Social Impact ] of the Premises [and the Building], agree in good faith, but without legal obligation, to co-operate with each other to implement relevant strategies and initiatives; and
- (d) must have due regard to any reasonably detailed written proposal made by the other for any measures which are likely to improve the Environmental Performance [and Social Impact ] of the Premises [and the Building] and the Landlord or the Tenant (as applicable) must respond to the other within a reasonable period of receiving the proposal with reasons for accepting, rejecting or modifying it bearing in mind the commonly agreed objective of improving the Environmental Performance [and Social Impact ] of the Premises [and the Building].
Drafting Note
The light green clause is the same as the provision at paragraph 1 in the Sustainability schedule (Schedule 7) of the MCL save for the deletion of the word “promote” and the possible inclusion of Social Impact and noting the wider definition of Environmental Performance in this toolkit. The clause used should be substituted for paragraph 1 in the Sustainability schedule (Schedule 7) of the MCL.
The parties can agree any reduction target and this may be dependent on factors such as the length of the lease and the nature of and level of emissions from the relevant building. In ‘The Carbon Law’ in Exponential Roadmap Initiative’s The 1.5°C Business Playbook, p.5; and J. Rockström et al., A roadmap for rapid decarbonisation, Science 355.6331, pp.1269-1271 (2017) a figure of 7% per annum is suggested. Other specific targets in relation to ESG matters such as Waste production, biodiversity, water use and Social Impact could be included in the above clause but are likely to require technical input.