This paper was published as part of the 2024 ACEEE Summer Study conference.
Green leases have evolved from basic landlord and tenant collaboration on energy efficiency to “performance-based” leases. Today’s green leases can include broader sustainability and social equity commitments, and accountability for shared action on net zero energy goals or legislative requirements. These leases are now a powerful tool for scaling decarbonization of the built environment and addressing social equity through real estate. Using real world examples from the Green Lease Leaders program, the standard for green leasing, this paper will examine a) the evolution from green to performance-based leasing, b) how lease language is being used currently by companies to drive energy performance and carbon reductions across their building portfolios and c) leasing-related strategies to meet landlord and tenant goals, and comply with building performance standards and other policies.
We will analyze the most effective clauses by lease-type scenarios and explore how performance-based leasing is structured to go deeper than the previous “green” leasing paradigm. To underscore the value of these leases for policy compliance, we will analyze and review potential economic consequences of not using performance-based leasing in scenarios such as New York City’s Local Law 97 and Boston’s Building Emissions Reduction and Disclosure Act. We will also share early findings from the Green Lease Leaders program’s new Platinum tier that recognizes both decarbonization and social impact.
