Making sure green doesn’t become mean Posted 2009, 18 August Just on a year ago, I posted a blog about the advent of green leases, in line with the increasing trends towards Green Star rated buildings. I was predicting that New Zealand would follow Australia and see more and more green leases being agreed. That is certainly proving to be the case. But as with any changes, green leases are not without their challenges. It comes down to balancing costs against new environmental initiatives. The green lease introduces a range of measures to monitor and set reduction targets around water and energy use and recycling. It also calls for careful management of the use of consumables including cleaning products and other items such as furnishings and materials in office fit-outs. The challenge is to what degree do these measures incur ongoing and fluctuating costs for the tenant? To maintain a green star rating, the landlord needs to have buy-in from tenants to achieve the measures required to achieve the green standards. As environmental targets are constantly being reviewed, it can be challenging to calculate the ongoing cost, as a number of variables come into play. I was recently involved in a negotiation where I needed to put a cap in place on behalf of a tenant regarding extra and ongoing expenditure to achieve green targets. Our aim was not at all to oppose the increasingly critical needs to reduce environmental impacts, but to ensure the costs were balanced carefully against what was financially possible for the tenant. It will take a little ironing out for a while, but landlord and tenant alike will eventually work out their joint and individual responsibilities around setting environmental impact targets.