Thu. Sep 28th, 2023
    Green Leases: Promoting Sustainability in the Real Estate Market

    According to the United Nations Environment Programme, buildings are responsible for almost 40% of carbon emissions and 36% of final energy use worldwide. In response to this, green leases, which encourage energy efficiency in buildings and establish sustainability goals, are becoming increasingly common.

    Green leases incentivize both landlords and tenants to improve the energy efficiency of buildings by establishing monitoring processes and distributing obligations between the parties. Property owners are motivated to invest in the construction or retrofitting of energy-efficient properties due to their increased value and improved access to financing. On the other hand, tenants contribute to this investment through higher rents in exchange for reduced utility bills and improved quality of spaces.

    Occupying a sustainable building also carries reputational benefits. However, it is important to note that there are no standard green contracts, as they are governed by the autonomy of the parties involved. These contracts can be non-binding, result-based obligations, or include incentives such as rent discounts for meeting specific goals.

    The purpose of these leases may vary, but they typically include efficient energy and water consumption, waste reduction and recycling, pollution reduction, the use of environmentally-friendly materials in construction and renovation works, and the implementation of sustainable HVAC systems. Additionally, some tenants and landlords may also include commitments regarding social responsibility and corporate governance, such as hiring individuals with special abilities.

    In conclusion, green leases are a growing trend in the real estate market that seeks to promote sustainability and reduce the environmental impact of buildings. Over time, it is expected that market players will decrease their exposure to energy-inefficient assets and drive the modernization of buildings, benefiting society as a whole.

    Source: United Nations Environment Programme