Circular Economy Principles for Landlord and Tenant Works
Statement of Intent
The Lease contains provisions for both parties to apply circular economy principles to work by either of them to the Premises or the Building via the use of a hierarchy of types of sustainable materials.
Preamble
Where the Tenant is carrying out any form of works to the Premises, whether maintenance, repair, initial fit-out, alterations or reinstatement or the Landlord is carrying out works to the Building or the Premises it is important to both parties that those works are carried out in a way and with materials that minimise the use of resources and which avoid Waste and greenhouse gas emissions. The UK Green Building Council’s Toolkit for a Circular Economy Circular-Economy-System-Enablers-Report.pdf (ukgbc.org) identifies green lease provisions as an enabler in achieving these goals. The Chancery Lane Project, has developed a clause Sustainable and Circular Economy Principles in Leasing Arrangements for Repairs and Alterations to deal with the application of circular economy principles during the life of a lease. The drafting below draws on that drafting.
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
When carrying out any works to the Premises [or the Building] the Landlord and the Tenant must use reasonable endeavours to:
- a) use the following where they are available and to the extent that to do so would not result in a material increase in cost:
- i. materials, products or components which can be reused again for the purpose for which they were previously used, or which have been removed from another building or site and can be reused without substantial modification and if not available or appropriate or if such materials contain more Embodied Carbon than the alternatives below;
- ii. materials, products or components which been produced in a way which minimises Embodied Carbon and which are recyclable or reusable and if not available or appropriate or if such materials contain more Embodied Carbon than the alternatives below;
- iii. materials or products which have been recycled and where relevant re-processed into the same or different products or materials and if not available or appropriate or if such materials contain more Embodied Carbon than the alternatives below; and
- iv. materials, products or components which can be recycled;
Provided that if the nature and scale of the proposed works or the project of which they form a part mean that it is disproportionate to assess the Embodied Carbon of the alternative materials the words “or if such materials contain more Embodied Carbon than the alternatives below” are deemed to be deleted;
- b) ensure that any fixtures, fittings, plant and machinery installed (whether by way of replacement or not) are resource efficient and in the case of replacement is at least as resource efficient as or more resource efficient than the replaced item;
- c) comply with the provisions of this Lease at clause [Recycling of Waste] relating to Waste; and
- d) carry out the works using methods of working which minimise the use of energy and water and the production of Greenhouse Gas Emissions to the extent that to do so will not result in any material increase in cost.
Medium Green Clause
When carrying out any works to the Premises [or the Building] the Landlord and the Tenant must:
- a) use the following where they are available:
- i. materials, products or components which can be reused again for the purpose for which they were previously used, or which have been removed from another building or site and can be reused without substantial modification and if not available or appropriate or if such materials contain more Embodied Carbon than the alternatives below;
- ii. materials, products or components which been produced in a way which minimises Embodied Carbon and which are recyclable or reusable and if not available or appropriate or if such materials contain more Embodied Carbon than the alternatives below;
- iii. materials or products which have been recycled and where relevant re-processed into the same or different products or materials and if not available or appropriate or if such materials contain more Embodied Carbon than the alternatives below; and
- iv. materials, products or components which can be recycled.
Provided that if the nature and scale of the proposed works or the project of which they form a part mean that it is disproportionate to assess the Embodied Carbon of the alternative materials the words “or if such materials contain more Embodied Carbon than the alternatives below” are deemed to be deleted;
- b) ensure that any fixtures, fittings, plant and machinery installed (whether by way of replacement or not) are resource efficient and in the case of replacement is at least as resource efficient as or more resource efficient than the replaced item;
- c) comply with the provisions of this Lease at clause [Recycling of Waste from landlord or tenant works] relating to Waste; and
- d) carry out the works using methods of working which minimise the use of energy and water and the production of Greenhouse Gas Emissions.
Drafting Note:
This clause is drafted to cover both landlord’s and tenant’s works and could be inserted into the Sustainability schedule (Schedule 7) of the MCL. If only one party is to be bound by these provisions or the material cost caveat would only apply to works done by one party then it may be appropriate to include the clause as a separate Landlord or Tenant covenant for the relevant party only.
In many cases landlords will have their own fit out or tenant alterations guidelines which tenants are obliged to comply with. These may overlap with some or all of the requirements in this clause. This should be checked to avoid the creation of overlapping or inconsistent requirements.
Where landlord’s works are covered by this clause, consideration should be given to the Service Charge provisions to ensure there is no inconsistency between this clause and those provisions.
The difference between the light green and medium green version of this clause is that the obligations in paragraph (a) in the light green version only apply to the extent they would not result in a material increase in cost.
Where the relevant works are minor the cost of assessing the Greenhouse Gas Emissions impact of the alternative material types may be disproportionate and parties may wish to consider agreeing criteria to govern which works or the scale of works this clause would apply to.