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HKGBC Green Tenancy Driver for Office Buildings
CH 7
GREEN LEASE
Depending on the level of commitment, the Landlord and Tenant are ready to fulfil. They
may either adopt a “soft” or “hard” approach in implementing green provisions. These two
approaches vary in consequences in case of any breach of green clauses.
• “Soft” approach: It is voluntary. It advocates a cooperative approach,
encouraging both parties to use reasonable endeavors in fulfilling the
commitment they make. Generally, the terms are more of aspirational
statements. No consequences are specified when clauses are breached.
• “Hard” approach: It carries contractual obligations and restrictions. It contains
punitive damages, such as partial forfeiture of “security deposit”, for either
party who does not conform to the clauses. Therefore, remedial actions and
dispute resolution clauses should be drawn up to manage risk and prevent
any unintentional onerous consequences of breach.
Pick an
Approach
As suggested by The Green Lease Handbook published
the Council of Australian Governments, there are several
factors that can help both parties decide which approach
is more preferable:
1. Are both parties equally committed to implementing
green initiatives
?
2. Is there any actual loss caused by either party’s
default
?
3. Are both parties experienced enough to manage
Green Lease obligations
?
4. Will the clauses stifle innovation by either party to
contribute to new sustainability measures
?
If both parties already have consensus in striving for
higher level of sustainability during the leasing period,
the “soft” approach may create the best environment
for “stretch” goals. The “hard” approach may be taken
if one party is less motivated and another party sees
possible noncompliance which may cause actual financial
imposts. A mix of soft clauses as visionary statements and
hard clauses as a deterrent to nonconformity may be an
option for both parties as well (Wheeler et al., 2012).
