BLOG: How will green leases deliver a more sustainable future?

Grosvenor’s James Manning discusses how their new green lease brings together tenants and landlords to drive down emissions
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October 5, 2020

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The current health crisis is having a devastating impact across the world for individuals, businesses and global economies. Now, as the evenings darken and the threat of another lockdown looms, sitting at home and hunched over my laptop, I find it hard to see the positives and look beyond the current health emergency.

However, ‘looking beyond’ is exactly what we need to do. Whilst the pandemic is justifiably at the forefront of our minds, we also have a responsibility to lift our eyes beyond the immediate. This is an opportunity to take valuable lessons from Covid-19 and apply it to the longer-term challenge posed by catastrophic climate change.

Working at a large central London landlord I have seen first-hand how owners and occupiers have come together to tackle the effects of the pandemic on communities and neighbourhoods. There has been a monumental shift in a relationship that could historically have been seen as more transactional (and, on occasion, combative). Now, supporting each other to develop creative and innovative solutions for our biggest Covid-related challenges has proved that we can collectively tackle other long-term issues.

Within Grosvenor’s London estate, tenants account for more than 90% of operational emissions from buildings. Whilst as a business we have committed to reaching net zero by 2030 and have signed the Net Zero Carbon Buildings Commitment, we simply cannot do this alone. Collaborating with occupiers and suppliers must be at the heart of our sustainability approach.

One important element of this partnership is green leases. A green lease is an agreement made between tenants and landlords to increase transparency, consolidate services and accelerate innovation. According to Dr Kathryn Janda from the Environmental Change Institute at the University of Oxford “Green leasing is a promising tool that tenants and landlords can use to develop joint environmental actions”. Whilst these leases are becoming increasingly prevalent in the UK market, they are still not commonplace, vary in their ambition and are not always effectively implemented.

One reason for that is their complexity. It isn’t as straightforward as just signing all tenants up to green clauses and mandating more environmental behaviours or greater energy efficiency. When developing green leases for our own tenants in the West End we focussed on three principles to ensure they were both attractive to tenants and delivered tangible environmental outcomes.

Firstly, going green must be both easy and cost-effective. It isn’t enough to simply demand green behaviours. Landlords must provide the means and opportunities for tenants to behave sustainably with minimal or lower cost implications for their business. Green energy is a perfect example. Many landlords are uniquely placed to leverage their size to procure green energy at lower and less volatile prices for tenants, helping them drive down CO2 emissions whilst also saving money. Typically, we have been able to save tenants an average of 6% on their utility bills by procuring green energy through us.

Secondly, green clauses must be collaborative. They need to include commitments from both parties. For example, agreeing to share environmental data to help landlords improve the energy efficiency as well as enable tenants to use their buildings more sustainably (whilst saving them money).  We are installing smart meters in many of our buildings so we can act on this data together with tenants to retrofit low EPC rated buildings and provide advice to occupiers on how they can save energy themselves.

Finally, green clauses should facilitate an ongoing dialogue between tenant and landlord on environmental topics. As a landlord we have a responsibility to educate ourselves and our tenants about environmental sustainability. Landlords don’t always know best, and we need to listen and learn from our occupiers as well as enable conversations within the communities that we operate. Many large landlords, like Grosvenor, lease properties to a wide range of businesses. By sharing knowledge through tenant forums, we believe we can significantly advance the sustainability agenda not only in London but across the UK and globally, by learning from and influencing tenants whose businesses have a national or global footprint.

 

In a nutshell: How Grosvenor’s green leases work

• Collect, analyse and act on tenant energy and water consumption data

• Procure 100% deep green energy for tenants at highly competitive and less volatile prices

• Prepare EPCs for buildings and determine landlord’s works necessary to improve environmental performance

• Expand waste and delivery consolidation programmes to reduce traffic and pollution

• Provide opportunities for training and knowledge sharing

 

Going green should be easy, cost-effective, collaborative and enable ongoing dialogue. These are all essential elements of Grosvenor’s evolving environmental approach. We are still at the beginning of our journey, but we are seeing great things already. And green leases form just one part of our strategy of collaborating more closely with tenants on green issues.

So, whilst we live in difficult times, I believe we all have an opportunity to take lessons from the current situation. The fact that all new leases at Grosvenor are green, coupled with the positive reaction we have seen from existing tenants, gives me great hope. Together we can achieve a greener, more resilient future for our cities and businesses in the UK.

James Manning is Transformation Manager – Sustainability & Innovation at Grosvenor Britain & Ireland