"Green leases" are leases of real estate which contain provisions requiring, or encouraging, the parties to ensure that the use and operation of the premises minimises environmental impacts.
Green leases are still a relatively new concept in Ireland and the UK, as well as on mainland Europe. In Australia however, the use of green leases is growing strongly due to the drive of the Federal Government to implement such leases in the public sector, as well as the desire of commercial organisations to maintain a green image.
A typical green lease will include obligations on both tenant and landlord. A landlord may for example be obliged to reduce the amount of waste being sent to landfills or to ensure that recyclable waste is actually recycled. A tenant on the other hand may have obligations in relation to indoor air quality, such as carbon dioxide monitoring and ventilation efficiency monitoring. A tenant may also be limited in the materials he or she may use in the fit-out of the premises, e.g. a tenant may be obliged to use recycled or recyclable materials only. Targets and benchmarks will also be included in a green lease, in order to enable the landlord and tenant to measure their own and each other's performance.
Due to the perceived additional costs involved, it is unlikely that the green lease concept will make a lasting impression on the Irish property market in the current economic climate. Considering however the increased focus on energy efficiency in buildings prescribed by the Building Regulations, and the fact that all premises for sale or rent require a Building Energy Rating Certificate as of January 2009, green leases may prove more popular in Ireland in the future. Almost every business can benefit financially from carrying out an environmental “health check” to see where savings can be made in areas such as energy usage, waste and air quality.