Another approach which is less common but which may be considered in relation to increasing ratings is the adoption of a When a party achieves an ‘ratchet’. 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 The landlord must: This provision contains a hard Absolute obligation obligation on the landlord to achieve the target base building on landlord maintain the specified rating. A rating within 15 months of the lease landlord may only agree to a lower commencement and maintain it rating than it believes will be throughout the term; and obtained to build in comfort that this arrange for an annual obligation will be met a environmental audit of base building – ‘stretch’ target is highly unlikely. services. In addition to the energy rating, the The landlord must implement: obligations also relate to: energy, waste and water use monitoring at least quarterly, with a waste; process for identifying potential consumption savings initiatives; water; energy monitoring specific to each low environmental impact tenancy/floor of building; cleaning products and energy consumption reduction consumables. 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 is in similar terms to The tenant must achieve the target Absolute obligation the landlord obligations. tenancy rating within 15 months of the on tenant 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)
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.
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