Environmental Impact of Property

In June 2025, the Department of Agriculture, Environment and Rural Affairs reported that the building sector is the third-largest contributor to greenhouse gas emissions in Northern Ireland. As such, this has sparked a growing concern and a renewed focus on improving environmental sustainability across the property sector.

Whilst new-build developments can, and increasingly do, integrate sustainable features from the outset, this is not always possible for existing properties which require more sustainable long-term solutions. To an increasing extent, this has come in the form of Green Leases.

What are Green Leases?

Green leases are commercial lease agreements that include specific provisions aimed at reducing the environmental impact of a property. These clauses place obligations on both landlords and tenants to collaborate on sustainability initiatives, such as improving energy efficiency, reducing waste, and enhancing overall environmental performance.

In Northern Ireland, green leases are gaining traction, particularly in light of the Executive’s Path to Net Zero Energy Strategy. Although there is currently no equivalent to the Minimum Energy Efficiency Standards currently in England and Wales, which legally require landlords to meet certain energy performance benchmarks, similar regulations may soon follow, and it is vital for clients to be proactive in meeting this challenge.

Many businesses are now voluntarily adopting green lease provisions as part of their broader environmental, social, and governance (ESG) commitments. These efforts are driven by a combination of environmental responsibility, reputational benefits, and the recognised need to align with the values of employees and customers. A notable example of this is Marks & Spencer’s, which famously committed to incorporating green clauses into all its store leases, using its huge market influence to set the standard across the retail industry.

Types of Green Lease Clauses

Green lease clauses can vary significantly in terms of scope. Generally, such clauses can range from requiring minimal commitment to those which are legally enforceable and require significant action.

Some examples of Green Lease Clauses may include:

• Requiring that Tenants only enter into electricity supply agreements for the Premises with a Green Supplier;
• Requiring reasonable endeavours to minimise the amount of waste which is sent to landfill;
• Increasing the right of the Landlord or Tenant to carry out alterations to the Premises which are designed to the improve Environmental Performance or any EPC Rating of the Premises;
• Confirming that the Landlord and the Tenant must in good faith co-operate with each other to identify appropriate strategies and initiatives to improve the Environmental Performance of the Premises.

Tailoring Green Leases to Fit

It is increasingly recognised that there is a strong business case for incorporating green leases into Lease Agreements; not just as a commitment to improving building performance but also to incentivise investment, meet corporate sustainability goals and to be proactive in meeting upcoming regulations.

However, green leases are not one-size-fits-all. They must be carefully tailored to the specific building, its use, and the commercial objectives of the parties involved. Flexibility is key, and clauses should be robust enough to drive meaningful change, but also adaptable to the practical realities of each property.

As the regulatory landscape continues to evolve, green leases offer a proactive way for landlords and tenants to align with sustainability goals, manage future compliance risks, and contribute to a greener and more sustainable environment.

Should you require any advice or assistance with any ESG-related matter, please contact our ESG department on 0289020050 or email mmw@mmwlegal.com.