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Real Estate Law

20 September 2022 · Article

Green agreements drive sustainable development in the real estate industry

In recent years, the real estate industry has demanded more environmentally innovative legal solutions. Not least, the demand is about introducing contractual terms to ensure that tenants operate in a sustainable way in their use of properties.

The issue of sustainability has become increasingly prominent in most industries in recent years. This is partly due to an increasing environmental awareness in the business community and partly to the fact that consumers are increasingly demanding sustainable solutions. The real estate industry is no exception. So-called green leases and sustainability clauses in leases have become increasingly common and more in demand, by both consumers and companies.

Green agreements lead to discussion about ambitions

There is little doubt that sustainability is an important and relevant issue in the construction and real estate industry. Part of the industry’s environmental impact is due to new constructions and renovations, as these require a large amount of materials and energy. At the same time, the actual use of the premises and homes accounts for another part of the environmental impact. There is therefore reason for landlords to guide their tenants in a more sustainable development.

The industry organization Fastighetsägarna has recently developed so-called green leases for its members. These are largely based on an exchange of information between the tenant and the landlord, such as that the parties must reconcile their environmental ambitions with each other and jointly develop action plans to reduce the property’s environmental impact. The green leases also contain some more specific requirements, such as contractual terms stating that the party responsible for electricity subscriptions must choose renewable electricity or that waste sorting must be complied with and made possible.

Re 100 contract clause and mobility houses examples of sustainability in practice

A number of years ago, IKEA, in collaboration with the Swiss insurance company Swiss Re, launched an initiative to get the world’s largest companies to choose renewable electricity. This cooperation resulted in a contractual clause called RE 100, which has become an increasingly common feature in the signing of rights of use. We see a clear upward trend in the number of clients who want to enter into agreements containing RE 100 clauses or equivalent.

When it comes to urban development, smart and environmentally friendly parking solutions have become an increasingly used feature. A mobility house can largely be used and adapted in any way, e.g. with a car pool and / or bicycle pool with electric and box bike and traditional parking. The mobility buildings should be able to quickly and easily adapt to changing needs in the city.

In the real estate industry, there is a great interest in contributing to a more sustainable development. If you have questions about contractual clauses relating to sustainability or other questions about property law – please contact us!