Tenant Spotlight – Driving Sustainable Practices through Green Leasing

Our discussion with Andrew MacGeoch, Partner at Bryan Cave Leighton Paisner (BCLP), Singapore/Hong Kong, focuses on BCLP’s industry-leading work in green leasing. Andrew shares his views on the importance of knowledge sharing and dialogue as companies increasingly embrace green leases. He also delves into BCLP’s internal sustainability journey and ambitions for the future.

Please describe BCLP’s sustainability-related initiatives for clients and your specific role.

Andrew:

As Head of Asia Real Estate and Infrastructure and Global Co-Head of our Hotels Group, I lead BCLP’s efforts in providing legal advisory services on real estate matters to a diverse range of stakeholders, including owners, investors, governments and operators. My work spans mixed-use developments and the hotel sector, exposing me to this industry’s potential for sustainability practices.

One of our recent key contributions has been promoting green leasing internationally. Green leases broadly refer to leases that contain terms setting out landlords and tenants’ obligations in connection with sustainability. While green leases may vary across jurisdictions, energy efficiency, waste and water management and a commitment to building certification requirements are some of the more  common focus areas. Green leases offer a multitude of advantages for property owners and occupiers. These include ensuring compliance with current and upcoming legislation, achieving cost efficiencies through enhanced resource management, fostering stronger employee engagement and retention, and elevating their reputations as responsible and forward-thinking businesses. Given our involvement in crafting lease agreements, we are uniquely positioned to assist clients in meeting their sustainability objectives in this way. Accordingly, we were excited to partner with Swire Properties in their continuing efforts to lead the industry by introducing standard green leasing clauses across their Hong Kong office portfolios.

To encourage the adoption of green leasing, we have also been advising the Better Buildings Partnership in the UK, which has developed a green lease toolkit. Initially produced in 2008, the toolkit is now widely adopted in the UK and internationally, providing practical, flexible, best-practice guidance to owners and occupiers. Users can select between light, medium and dark green clauses depending on the maturity of both parties’ sustainability commitments. 

In the hotel sector, our work has centred around driving thought leadership around sustainability by recently hosting a C-suite breakfast in Singapore, bringing industry leaders together to discuss decarbonisation strategies and collaborating on a white paper to further this dialogue. Additionally, we have rolled out a significant campaign in the UK and Europe and, in a more limited manner here in Asia, around green infrastructure, sharing videos, articles, statistics and best practices with clients. The campaign, called “The Sustainability Imperative”,  focussed on four key topics: (1) how the ”green premium” is impacting commercial real estate values; (2)  the transition from green intention to action; (3) scaling up renewable energy investment; and (4) examining the strategy, appetite and levels of renewable energy investment. These initiatives exemplify our role as facilitators of dialogue and thought leadership, particularly in encouraging our clients to drive industry-wide change.

What is the role of landlord-tenant collaboration in green leasing? How can such collaboration enhance positive outcomes for both parties?

Andrew:

Green leasing thrives on landlord-tenant collaboration. Clauses may include a wide range of stipulations, from adopting renewable energy usage in commercial properties, which is not so easy in parts of Asia at the moment, to specific provisions on energy efficiency upgrades. Success depends on clear dialogue and formally documented provisions, reflecting a mutual commitment to sustainability goals.

It is important to note that the ability to implement green leasing practices varies significantly between markets. For example, renewable energy options are generally more accessible in Europe, while infrastructure gaps in Asia, including inadequate grid capacity for integrating renewable energy, limited access to energy-efficient technologies, and a lack of supportive regulatory frameworks, create significant barriers to implementation. Collaboration must, therefore, focus on feasible, locally tailored solutions.

While green leases are becoming more common, challenges persist as upfront investment may deter some stakeholders, especially those focused on shorter-term gains. When advising hotel clients, one of the solutions we have advocated is to have a special “green” reserve fund. This is a savings plan or sinking fund where a small percentage of revenue drips into the fund every month so that when the time comes for a major renovation, there is a planned provision for sustainability-related enhancements.

Ultimately, green leases benefit both parties: landlords who prioritise sustainability often attract high-quality tenants, while tenants achieve enhanced operational efficiencies and a stronger reputation for corporate responsibility. Moving forward, green leases could also incorporate social impact clauses to extend sustainability beyond environmental commitments. By fostering a spirit of transparency and partnership, landlords and tenants can work together to achieve meaningful outcomes.

How is BCLP involved with the Green Performance Pledge (GPP)?

Andrew:

Swire Properties’ GPP is built on landlord-tenant collaboration and aligns closely with BCLP’s environmental objectives. We joined after learning about its potential, and our involvement has since evolved to include efforts like reporting on our energy and water usage, which we actively monitor using the landlord-provided Tenant Portal. The friendly competition fostered by the GPP works very well. By setting benchmarks, it encourages us to aim higher as we make plans for our office operations and upcoming office upgrade. We are committed to  reducing our energy and water consumption, as well as waste generation, as we strive to do the right thing in line with our firm’s global sustainability initiatives.

Looking ahead 10 years, how will the legal sector further the development of sustainability measures?

Andrew:

The next decade will likely see a significant evolution in sustainability through legislative and regulatory advancements. Legal professionals will play a crucial role in shaping, interpreting and implementing these changes. By collaborating with clients, landlords and governments, the legal sector can advise on enforceable sustainability-related provisions and help to drive innovation.

Importantly, fostering thought leadership and sharing best practices will remain essential in pushing the sustainability agenda forward. Thought leadership enables firms like ours to influence conversations and amplify impact amongst our extensive network of multinational clients across various industries. In the hospitality sector, we are already seeking collaboration with organisations such as the Hotel Owners Association, GREEN Hospitality and the Sustainability Hospitality Alliance—now launching in Asia—that provide critical platforms for dialogue. We are also in the early stages of discussions with academics in Hong Kong and Singapore to further understand and advance knowledge sharing. This is to ensure that the latest insights on the development of sustainable smart cities—for example, the implementation of solar, wind and waste-to-energy projects in the design and operation of green buildings—are available to our stakeholders. By engaging with these organisations, BCLP is well-positioned to advocate for the transition towards more sustainable operations and foster positive change.

The GPP is our flagship programme towards achieving our SD 2030 Strategy and longstanding commitment to fighting climate change, in joint efforts with our office tenants in Hong Kong and the Chinese Mainland. Learn more about the programme on the GPP Website.