Green Leases Go Platinum for Social and Environmental Impact
March 28, 2022
When we think about equity and climate justice, buildings don’t often jump to mind, yet they play a pivotal role in issues related to greenhouse gas emissions, health, economic disparities, and community resilience to disasters. The connection between buildings and climate has gained awareness in recent years—with many pledging to make buildings more efficient, or to use renewable power sources—but a minority of real estate companies and tenants have addressed social justice in the communities where they do business or lease space. However, we are at a pivotal moment of change. In addition, the real estate sector is experiencing an astronomical disruption due to stakeholder demands for greater environmental and social action, which is reshaping the future of buildings. The Green Lease Leaders program, managed by the Institute for Market Transformation manages in partnership with the Department of Energy, has proven that leases are a tool for addressing energy reduction, and are pleased to announce our innovative Platinum-level leasing model which integrates building performance and social priorities.
Platinum-level recognition integrates ambitious building energy reduction goals with social impact goals.
Traditional commercial lease agreements act as a barrier to both landlords and tenants trying to address environmental and social priorities because there is a split between who pays for building improvements and who benefits from them. Green leases offer a mutually beneficial solution that is based on a fundamentally more communicative and collaborative landlord-tenant relationship. The Green Lease Leaders program has grown dramatically even during the COVID-19 pandemic; program alums now manage 4 billion square feet of real estate. The program’s Silver and Gold tier recognize companies for actions that reduce energy use and strengthen tenant-landlord relationships. Our new Platinum-level recognition integrates ambitious building energy reduction goals with social impact goals while maintaining the core principles of the program.
The new Platinum requirements do this by addressing five core areas:
- Health. Real estate companies and their tenants can provide a healthy and safe working environment for all occupants by utilizing expertise, technology, and innovation to manage the day-to-day performance of buildings and tenant spaces. Real estate plays an essential role in improving the indoor air quality of buildings and can go beyond that to provide access to healthier foods, physical activity, and wellness activities.
- Resilience. Buildings can be renovated and managed to increase their “passive survivability”- that is, the degree to which they can keep people sheltered and safe even without utility power or water service. This might include making buildings heating or cooling centers for extreme weather events or sites for emergency supplies collection and distribution, or whatever is most needed in that community. Weather events have cost communities billions of dollars and almost all have had to rebuild what was lost. Real estate can change the costly pattern of rebuilding by building with resiliency in mind.
- Economic inclusion. Buildings can be high-performing while providing open and fair access to job opportunities for the services needed by the building and advancing the wealth of the local communities they are in. This can be done through intentional evaluation of the building manager’s supply chain, support for programs that provide resources and vocational training to address local economic needs, and alignment of partnership and procurement policies with these ambitions.
- Social Justice and Racial Equity. Historically, real estate practices have contributed to marginalization and discrimination that have severely limited economic and social opportunities for people of color and for some minority groups. Relevant examples include racist zoning policies, unequal access to services and opportunities, and decisions to site factories and powerful pollution producers in communities of color. Real estate can play a significant role in remediating many of these injustices. Renovating or constructing high-performance buildings can improve occupant health outcomes and potentially lower energy cost burdens, which are highest for those with the least means to pay these bills. Real estate actors can also create green spaces in communities of color, improve access to transportation, and can provide local job opportunities for historically disadvantaged businesses and residents.
- Scope 3 Emission Reduction and Embodied Carbon. The construction industry has the second largest global supply chain carbon footprint of any industry in the world. Companies’ supply chain emissions are 11.4 times higher than their operational emissions on average, so there is tremendous potential for a positive impact. This can be achieved by choosing lower-emission products and suppliers that help organizations reach emissions targets at product, project, and enterprise levels.
The above framework can be achieved by a landlord and a tenant by integrating a whole building performance reduction goal in carbon or energy use intensity and by establishing social impact goals for health, resilience, diversity, and climate, in the form of corporate guidelines, corporate policies, drafted or executed lease, operating procedures, and landlord-tenant engagement strategies. There is intentionally a good deal of flexibility in meeting the Platinum requirements because every building and every community are different, and the program aims to provide guidance to the broadest possible array of commercial spaces.
Our intention is that this program continues to change and adapt as we learn from leading real estate companies and their tenants. This framework provides a clear starting point for strategic discussions and planning that can take place now. The climate crisis and the racial reckoning of the last two years are increasing awareness of the role buildings play in both, and increasing demand for greater adherence to environmental and social principles. It is through intentional adoption of these practices in leased spaces that we will start to see drastic and positive impacts to not only the environment but for community prosperity. Start this journey now by assessing leasing practices, and begin drafting new lease language and policy with the guidance of Green Lease Leaders Platinum approach.