Key points to come out of the discussion were:
Raise the [net zero] standard
Net zero (and how to achieve it) currently means different things to different people. An industry wide standard should be adopted for clarity and consistency and to give owners and occupiers confidence to act. This is crucial if the real estate industry is to succeed in reducing emissions and meeting its net zero targets.
Mills & Reeve looked at this issue in more detail in our Building towards net zero collaboration with Professor Sean Smith, Chair of Future Construction, School of Engineering and Director of the Centre For Future Infrastructure, Edinburgh Futures Institute, University of Edinburgh. Read more about it here.
Having already published its Net Zero Carbon Buildings Framework, the UKGBC launched a cross-industry initiative in May 2022 to develop the UK’s first Net Zero Carbon Buildings Standard. Intended to provide a single, agreed methodology for the industry to measure their built assets in line with net zero targets and expected in 2023, this cannot come quickly enough.
Where there’s a will…
A show of hands made it clear that whilst consideration of carbon emissions was very important to the audience of over 150 delegates, less than a handful had carbon plans in place at their science park. But the impetus is there to start developing and implementing plans. A clear route to net zero is increasingly becoming a prerequisite for funders and investors. Equally, a growing number of tenants now see ‘green’ space as standard, with evidence of ‘brown discounts’ for less sustainable space. The impending huge hike in energy bills will also drive the flight to quality, energy-efficient space.
Come on, come on, let’s work together
The best way for landlords and tenants to demonstrate their green intentions is by documenting them. The inclusion of a series of provisions, either in the lease document at the start of a tenancy or in a standalone memorandum of understanding, agreed at any time, can help the parties focus on their key concerns and requirements for the space and work collaboratively to achieve their respective objectives and targets. It is acknowledged that occupancy of lab/scientific space may have high energy/resource demands, but the green lease provisions can be tailored to suit the individual parties’ proposed use of the space.
Fundamental to achieving net zero will be data sharing between landlords and tenants. After all, you can’t get to net zero if you don’t know where you’re starting from and can’t measure your progress along the way. Including a provision in the lease setting out data sharing requirements, with appropriate confidentiality protection, will give the parties the clarity and confidence they need to work together.
The parties’ ultimate aim should be to collaborate to improve the environmental performance of the premises. There will be questions of cost to address – for example, who pays for improvements? – but as both parties stand to gain from having more sustainable space, the commercial solution is there to be negotiated. A collaborative, rather than adversarial approach here will smooth these negotiations.
Catch us if you can
The general view was that Government policy and regulations still continue to lag behind the industry. Whilst legislation would be helpful to bring consistency and provide the carrot and/or stick to get the most reluctant actors moving, the industry will continue to strive for net zero regardless, with other market-centric incentives fuelling the drive.