Reimbursement or payment of costs clauses Parties to the lease must consider who will be responsible for additional “green”-related expenses, such as the cost of obtaining, or adjusting, a rating such as NABERS and even the additional cost of managing sustainability arrangements. Works, fitout and repair Materials and repair Where the Green Star rating tool is used, green materials take on importance for the ratings of a building. The use of green materials may then be mandated in a green lease’s fitout, repair, maintenance and make good provisions. Landlord’s right of access The landlord’s right to access the premises may be modified to allow: entry by landlords and environmental auditors in relation to environmental audits of the premises; and landlords to undertake any works necessary for energy efficiency reasons (with appropriate protections for the tenant’s use and enjoyment of the premises). Removal of fixtures Provisions governing the removal of fixtures—for example, as part of make good—in a green lease may more readily facilitate the recycling or re-use of fitout where appropriate. Landlord’s consent to alterations Provisions governing a landlord’s consent, or refusal to provide consent, to alterations typically do not allow a landlord to refuse alterations that would otherwise have a detrimental effect on the energy efficiency of a building. A green lease may introduce this idea as a means of ensuring that all fitout and other works undertaken by tenants will be consistent with the sustainability goals of the building. This may range from requirements regarding the types of materials used to review of design to ensure there will not be an adverse impact on the desired ratings. For example under these provisions, a landlord may require a tenant to install supplementary (tenant) air-conditioning to service meeting rooms or a computer room rather than inefficiently servicing these higher-demand areas from the base building system. Other
Another approach which is less common but which may be considered in relation to increasing ratings is the adoption of a ‘ratchet’. When a party achieves an actual rating higher than its target rating, this will effectively increase the target rating and the party will agree to maintain the higher rating. The advantage of this approach is that it would be self-executing and not require further agreement or expert determination. However, there is a risk that some parties would be discouraged from achieving a higher rating, as it would then need to be maintained. Green performance obligations Set out below are some examples of green performance obligations which may be incorporated in a green lease, ranging from stricter absolute obligations to softer aspirational statements. Clause type Summary examples Comment Absolute obligation on landlord The landlord must: achieve the target base building rating within 15 months of the lease commencement and maintain it throughout the term; and arrange for an annual environmental audit of base building services. The landlord must implement: energy, waste and water use monitoring at least quarterly, with a process for identifying potential consumption savings initiatives; energy monitoring specific to each tenancy/floor of building; energy consumption reduction targets; regular maintenance of air and ventilation services; use of low environmental impact cleaning products; and procurement of low environmental impact consumables (paints, light fittings, ceiling tiles, flooring, etc) for all works in the building. This provision contains a hard obligation on the landlord to maintain the specified rating. A landlord may only agree to a lower rating than it believes will be obtained to build in comfort that this obligation will be met – a ‘stretch’ target is highly unlikely. In addition to the energy rating, the obligations also relate to: waste; water; low environmental impact cleaning products and consumables. Absolute obligation on tenant The tenant must achieve the target tenancy rating within 15 months of the lease commencement and maintain it throughout the term. The tenant must: use low environmental impact materials; procure low environmental impact consumables (paints, light fittings, ceiling tiles, flooring, etc) for all fitout works; not adversely alter any energy or water equipment installed in the premises by the landlord; participate in (minimum quarterly) This provision is in similar terms to the landlord obligations.