Green leases are good for business - Hannah Done

The real estate industry is a huge contributor to global carbon emissions. According to the Scottish Government there are 220,000 non-residential buildings across the country generating seven per cent of Scotland’s total greenhouse gas emissions and consuming 12 per cent of the country’s energy. A number of these buildings are occupied under commercial leases.

Hannah Done, Associate Director of Office Agency at JLL, discusses why more Scottish businesses should take advantage of green leases to support their sustainability ambitions.

That’s why decarbonising the built environment needs to remain a priority for the Scottish real estate industry.

One mechanism that can assist in improving the performance of the built environment are green leases – a lease that adds a series of provisions into standard contracts to reduce the environmental impact of buildings. It is agreed through a discussion between a landlord and an occupier, which can be tailored to the particular needs of landlords, tenants or buildings.

These leases can be quick and easy to agree and make a considerable difference when it comes to reducing a building’s carbon emissions.

Getting ahead

The Scottish government has set out plans to reduce emissions in the country’s built environment by at least 68% by 2030. In order for a landlord to benchmark and improve a building’s energy performance, or for a business occupier to assess their occupational environmental impact across their operations, they need to assess their building’s current environmental performance.

One of the biggest obstacles to this is data availability. Without green leases, which can allow for the data sharing between occupiers and their landlords, neither party are contractually obliged to share the energy use data for the accommodation they occupy. This makes it difficult for businesses to set and accurately track the sustainability targets needed to reduce their carbon footprint.

Whether a business is relocating or looking to adapt their lease to be more environmentally friendly, sustainable provisions should also be included where possible. As well as data sharing obligations, this can include options to switch to renewable energy use, decrease waste, enact better waste management and implement better water efficiency.

Beyond green benefits

Encouragingly, the benefits of green leases extend beyond sustainability. For landlords and occupiers, more sustainable buildings will perform better over the long term and green leases can add the advantage of lower operational costs. Assets with green leases will also benefit from a reduced chance of obsolescence and further cost burdens as regulation tightens – making them a smart option to simultaneously boost ESG credentials and drive down costs.

JLL’s recent report, ‘What makes an investible place?’, also identified Environmental Responsibility as a key metric for investors. Most investors are developing strategies aimed at decarbonising their portfolio over the coming decades, and low-carbon, environmentally friendly buildings fit nicely into these strategies.

A green lease can also help firms attract and retain prospective employees in a competitive job market. We’re increasingly seeing employees express an interest in the impact their workplace has on the planet. Given how competitive the job market is now, it’s crucial employers can display how they are pursuing greener operations and creating a more sustainable working environment.

At JLL, we’ve recently agreed a green lease at our Canary Wharf office in London and aim for all our offices to be net zero by 2030.

A more sustainable Scotland

The spotlight is on Scottish firms to decarbonise and pursue robust net zero strategies over the coming years. Taking steps now will support with our long-term goal of becoming a net zero country.

We’d urge firms to consider how they can incorporate green leases into these strategies and act now to ensure long-term success.

Hannah Done, Associate Director of Office Agency at JLL, discusses why more Scottish businesses should take advantage of green leases to support their sustainability ambitions.