Green Leases
Are green leases or green lease provisions mandatory or optional? If mandatory, to whom do they apply? If optional, is there significant take up?

The BCA has created a Green Lease toolkit,1 the second version updated and aligned with Green Mark: 2021, with a single schedule of Green Clauses (Green Schedule) applicable for all nonresidential building typologies to help landlords and tenants to work together to improve their environmental performance over the life of the building that they manage or occupy. The Green Schedule provides a list of standard clauses that contain specific provisions for sustainable design and management as well as health and well-being.

Although adoption of Green Clauses is optional, a 2022 survey across Asia Pacific2 noted that up to 42% of occupiers and large developers have signed leases incorporating certain Green Clauses. The Green Schedule should be read in conjunction with the relevant BCA Green Mark criteria. Where the building features a Green Lease for its tenant-occupants that meets the BCA's prescriptions for Green Leases under the scheme, Green Mark points will be awarded accordingly; for example, where Green Lease implementation for tenants to ensure the targeted energy saving is achieved or to control lighting power density for tenanted areas.3 The base building itself must first achieve the following:

  • A Green Mark GoldPLUS or Platinum rating
  • The Public Utilities Board's Water Efficient Building (Basic) Certification4

The Green Mark: 2021 score sheets also provide a maximum of available points under the whole life carbon section for fit-outs:

CN3.1: Green Lease

Available points for the following:

A comprehensive Green Lease (or equivalent) to be incorporated into the tenancy agreement, which establishes agreed levels of environmental performance between the landlord and tenant for the following:

(a) More than or equal to 50% of the net lettable area

(b) More than or equal to 70% of the net lettable area

(c) Every tenant

One point for (a)

Two points for (b)

Three points for (c)

Building owners5 in a Green Lease partnership programme with their commercial tenants may also apply for the Green Mark Pearl rating,6 which recognizes building owners/landlords and tenants/occupants working to achieve greater environmental sustainability for the same building.

The BCA describes this environmentally friendly leasing arrangement or "Green Lease" as an agreement between landlord and tenant that sets out environmental objectives on how the building is to be improved, managed and/or occupied in a sustainable manner. Any cost savings in energy and water can be shared among parties and provide a better indoor environment.

The Green Lease acknowledges that there are areas of cooperation between building owners and tenants (and any relevant service providers and contractors) and addressing traditional structural barriers to implementation, such as split incentives and interests between building owners and tenants, ensures that the parties with influence over key aspects of environmental performance obtain some benefit from implementing the improvements. For example, installing energy-efficient lighting that generates less heat has the following benefits:

  • The landlord benefits from reduced overall air-conditioning energy consumption.
  • The tenant benefits from the reduced energy bill for lighting usage.

The Green Lease improves transparency and accountability through providing an agreement between both landlord and tenant ensuring that the parties identify and address problems promptly and efficiently together.

The Green Schedule provides a list of standard clauses that contain specific provisions for sustainable design and management as well as health and well-being. This includes monitoring and improving energy efficiency, water efficiency, sustainable material, waste management, indoor environmental quality, and comfort and well-being of the users and occupants. Through a target/outcome-based approach, the Green Schedule applies to building landlords and tenants. These standard provisions are fully editable to suit an individual building typology's or individual tenant's context.

This schedule can form part of a memorandum of understanding, or part of the tenancy agreement between the building landlord and individual tenants, to ensure that the tenant's actions and operations do not negatively affect the overall building's sustainability performance and aspirations. The building landlords should put in place mechanisms/processes for the management, validation and remedial actions/penalties for noncompliance, laid out in a transparent manner and agreed by the tenant. A building management committee comprising representatives of the landlord and tenant(s) must be formed (and should meet at least twice annually) and will be responsible for developing and implementing the environmental objectives under the Green Lease, and monitoring the building's performance and reporting periodically on the outcomes.

Drafting considerations for a Green Lease

When preparing a Green Lease, building owners should consider which categories of provisions in the Green Schedule should be made mandatory and which may be designated as best practices to be performed by the tenants on a best-endeavors basis.

Building owners should also take into account the length of tenancy before specifying certain obligations as mandatory, the noncompliance of which will constitute a breach of lease. While short-term tenants may be deterred by the additional costs in mandating compliance with sustainability obligations, these terms may instead be drafted guidelines or non-binding undertakings and be made more palatable by the provision of incentives for compliance.

Information sharing and submission/disclosure

To support the Green Schedule obligations to meet annual targets for carbon emissions, energy, water and waste reduction and to demonstrate these with tangible results, building owners require tenants to share information on energy and water use and the quantum of waste and emissions generated.

Green Lease provisions should cover the scope of data to collect, the frequency of submission and the installation of meters to track this information.

Where the building owner is required to submit data for a certification assessment or to report on and disclose energy use and emissions, the building owner should provide for tenant consent to avoid issues of confidentiality, and clearly state the extent of information required, the purpose for sharing the information and the third parties the information will be disclosed to.

 


[1] See the BCA: Green Lease Toolkit: Green Schedule; part of Green Mark: 2021.

[2] JLL Green Leases: Setting the Tone for Responsible Leases; 30 September 2022.

[3] BCA Awards 2020: Green Mark Award.

[4] See the BCA: Green Lease Toolkit: Green Schedule; part of Green Mark: 2021.

[5] City Developments Limited: Manufactured Capital: Green Leases.

[6] The BCA Green Mark Pearl Award.