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Find where you could use climate-aligned drafting on a freehold sale/purchase, the grant of a lease, or a development
Built environment climate contracts tool
Is the property
already built?
YES
YES
NO
NO
Due Diligence considerations
Heads of Terms considerations
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Should you obtain a climate risk report?
Should you raise additional enquiries if the property is subject to lease(s), e.g. around waste/water management, data sharing, source of electricity?
If there is going to be a lock out/exclusivity agreement, consider including an obligation on the buyer around decarbonisation/sustainability, so that the seller can terminate if the buyer will not meet those objectives.
Also consider whether advisers appointed by the parties need to satisfy minimum ESG criteria.
Materials to be used/where sourced from
Green infrastructure
An obligation to include community facilities/uses
Details of sustainable construction methods
Restriction on identity of tenant to ensure they meet set sustainability standards
Control on assignees to ensure they meet set sustainability standards
Heads of Terms considerations
Is it a freehold sale?
Is it the grant of a lease?
Will you be doing any works?
Where are the funds for the purchase coming from?
Reporting to your client
Is it a freehold sale?
Electricity to be from renewable sources
Control over tenant’s business operations, e.g. ban on use of single use plastic
Points to consider for a lease:
Materials to be used/where sourced from
Electricity to be from renewable sources
Green infrastructure
An obligation to include community facilities/uses
Details of sustainable construction methods
Requirements re BREEAM ratings and EPC ratings
Points to consider on a development:
Due Diligence considerations
Transfer
Overage agreement
Consider obligations in relation to the future use of the
property (e.g. development, or net zero development
requirements), and restrictions on building in certain areas to
allow for open space/biodiversity areas. Also consider obliging the parties to execute electronically (you could set this out in the sale contract).
Transfer
includes an overage schedule but this is drafted on the basis that the original value is that of the land with the climate positive planning permission. Climate-aligned drafting in an overage agreement is unlikely to be applicable in other scenarios. E.g. if you are dealing with sales overage and want to oblige the developer to build sustainably, this would be better dealt with in the development agreement.
Overage agreement
Overage agreement
Commercial lease
Residential lease
Car parking licence
Property management agreement
Commercial lease
is designed for new build properties, but older properties that need retrofitting are a bigger issue. The push to retrofit will be greater for tenants who own a share of the freehold but, in any event, government funding will be needed to retrofit on a large scale. Buyers may be able to get a better mortgage rate if the property has a good EPC rating. Bigger landlords may report scope 3 emissions, but most will not, so this will not be a big incentive. Finance is key, and this includes guidance from UK Finance.
Where properties are managed by managing agents, obligations to manage the property sustainably could be included in the property management agreement.
Consider obliging the parties to execute electronically.
Residential lease
Restrict use to electric vehicles (EVs) or include a mechanism so that the licence fee is lower if used solely for EVs. This is something that would need to be agreed at Heads of Terms stage.
Car parking licence
Include obligations to manage the property in an environmentally conscious way (for examples see
[Hannah’s Clause] Green Service Charge Provisions).
Include obligations to only instruct contractors who comply with Green Working Practices. These would need to be defined, for examples see
[Ashkan’s Clause] Sustainable On Site Working Practices.
Property management agreement
Is it the grant of a lease?
([Raphael’s Questionnaire] Climate Change DDQ)
[Matthew’s Clause] Late Payment
[Alice’s clause] Single Use Plastic
[Emma’s Clause] Green Residential Lease Clauses
[Lotta’s Clause] Renewable Electricity
[Rosie’s Clause] Alteration/Improvement Provisions
[Aatmay’s Clause] Repairs and Alterations
[Hannah’s Clause] Green Service Charge Provisions
[Toryn’s Clause] Assured Shorthold Tenancy Clauses
[Emma’s Clause] Green Residential Lease Clauses
[Toryn’s Clause] Assured Shorthold Tenancy Clauses
Also consider obligations regarding the tenant having to source products locally
([Raphael’s Questionnaire] Climate Change DDQ), sustainable travel plans, provision of shower facilities/bike racks, and drafting obliging the parties to execute electronically.
Consider adapting
[Matthew’s Clause] Late Payment and
[Alice’s Clause] Single Use Plastic
can be adapted for commercial leases.
[Lotta’s Clause] Renewable Electricity
[Rosie’s Clause] Alteration/Improvement Provisions
[Aatmay’s Clause] Repairs and Alterations
[Hannah’s Clause] Green Service Charge Provisions
[Ashkan’s Clause] Sustainable On Site Working Practices.
[Hannah’s Clause] Green Service Charge Provisions)
What to do before you get planning permission
The planning permission
Where are the funds coming from?
Development/
construction of the property
Is it a freehold sale?
Is it the grant of a lease?
Reporting to your client
Option agreement
Collaboration agreement
Promotion agreement
Conditional contract
Option agreement
Parties could specify the sustainability credentials of the party to whom the land is sold. Any obligations to build sustainably (so far as not specified in the planning permission) should be set out in the documents entered into with the purchaser.
Consider obliging the parties to execute electronically.
Collaboration agreement
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[Rory’s Clause] Net Zero Land Promotion Agreement
Promotion agreement
Obligation in relation to the type of planning permission to be obtained. For details of drafting for a climate positive planning permission see
Conditional contract
The planning permission
The Section 106 agreement/
Unilateral undertaking
Care must be taken in developers offering net zero
obligations in the S106 agreement/unilateral undertaking if
these are not required in the local plan, as these could be seen as an inducement to get the planning permission.
The Section 106 agreement/Unilateral undertaking
Obligations around only promoting for net zero/environmentally conscious development.
Consider obliging the parties to execute electronically.
[Edgar’s Clause] Landscape Design Projects
[Evelyn & Ezra’s Clause] Net Zero in Development Projects
Section one
Section two
Section three
Section four
Depending on their sustainability agenda and cost, developers may consider whether they might build in a more sustainable way than obliged to by the terms of their planning permission. If the developer intends to build something that is not in accordance with the planning permission, there is a risk that the development will be unlawful. If they want to make amendments to the authorised development, they will need to apply for a variation by way of a section 73 application or an application for a non-material amendment. If the proposed development is materially different, a new planning permission will be required.
The biggest push for sustainable developments will arguably be lenders requiring sustainable building as a condition to financing.
Facility agreement
CLLS Certificate of Title
Transfer
Overage agreement
Include details of how the borrower must act in a sustainable
way. Needs to be drafted as a non-financial covenant, so that
breach of it would allow the lender to enforce.
Consider relevant provisions from:
Facility agreement
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Overage agreement
[Tomas’ Disclosure Checklist] CLLS Certificate of Title
CLLS Certificate of Title
Report on title
Report on lease
[Marni’s Clause] Report on Title – Climate Change Clauses
Report on title
Licence for alterations
Supply/procurement of materials
Staff resourcing
For extensive works, consider some of the provisions of [Mary’s Clause] JCT Environmental Obligations around practical completion not being achieved unless energy efficiency obligations are met.
Where you want to check the environmental credentials of contractors adapt
[Robyn’s Questionnaire] Self-Assessment Climate Questionnaire.
Consider obliging the parties to execute electronically.
[Estelle’s Clause] Climate Standard of Care (Construction)
[Aatmay’s Clause] Repairs and Alterations
Licence for alterations
[Matilda’s Annex] Net Zero Standard for Suppliers
[Raphael’s Questionnaire] Climate Change DDQ
[Tristan’s Clause] Construction Materials: Procurement
[Emma’s Clause] Green Residential Lease Clauses
[Toryn’s Clause] Assured Shorthold Tenancy Clauses
[Emma’s Clause] Green Residential Lease Clauses
Supply/procurement of materials
See
Staff resourcing
Facility agreement
Forward funding agreement
CLLS Certificate of Title
Agreement for lease with works
Development agreement
Building contract
Engineering contract
Reference needs to be to the works, as defined in the Building Contract, so you need to ensure that there is an obligation to carry out the works sustainably. The definition will also link to the planning permission, which may specify the BREEAM rating.
Development agreement
[Ashkan’s Clause] Sustainable On Site Working Practices
Building contract
Professional appointments
Crane oversail licence
Scaffolding licence
Staff resourcing
Is it a freehold sale?
Transfer
Overage agreement
Consider obligations in relation to the future use of the
property (e.g. development, or net zero development
requirements), and restrictions on building in certain areas to
allow for open space/biodiversity areas. Also consider obliging the parties to execute electronically (you could set this out in the sale contract).
Transfer
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Something comes here
Overage agreement
includes an overage schedule but this is drafted on the basis that the original value is that of the land with the climate positive planning permission. Climate-aligned drafting in an overage agreement is unlikely to be applicable in other scenarios. E.g. if you are dealing with sales overage and want to oblige the developer to build sustainably, this would be better dealt with in the development agreement.
Overage agreement
Is it the grant of a lease?
Commercial lease
Residential lease
Car parking licence
Property management agreement
is designed for new build properties, but older properties that need retrofitting are a bigger issue. The push to retrofit will be greater for tenants who own a share of the freehold but, in any event, government funding will be needed to retrofit on a large scale. Buyers may be able to get a better mortgage rate if the property has a good EPC rating. Bigger landlords may report scope 3 emissions, but most will not, so this will not be a big incentive. Finance is key, and this includes guidance from UK Finance.
Where properties are managed by managing agents, obligations to manage the property sustainably could be included in the property management agreement.
Consider obliging the parties to execute electronically.
[Toryn’s Clause] Assured Shorthold Tenancy Clauses
[Emma’s Clause] Green Residential Lease Clauses
[Toryn’s Clause] Assured Shorthold Tenancy Clauses
Residential lease
Restrict use to electric vehicles (EVs) or include a mechanism so that the licence fee is lower if used solely for EVs. This is something that would need to be agreed at Heads of Terms stage.
Car parking licence
[Hannah’s Clause] Green Service Charge Provisions).
[Ashkan’s Clause] Sustainable On Site Working Practices.
[Hannah’s Clause] Green Service Charge Provisions)
Property management agreement
Will you be doing any works?
Where are the funds for the purchase coming from?
Reporting to your client
Where are the funds coming from?
Development/
construction of the property
Consultants are primarily involved in design or managing the project.
Professional appointments
Crane oversail licence
Drafting for freehold sale/purchase (including overage), grant of a lease (and ancillary documents), funding, reporting to your client
Drafting for stages from pre-planning, funding, construction, sale/lease, to reporting to your client
[Robyn’s Questionnaire] Self-Assessment Climate Questionnaire.
Estelle’s Clause] Climate Standard of Care (Construction)
[Aatmay’s Clause] Repairs and Alterations
[Mary’s Clause] JCT Environmental Obligations
[Alex’s Clause] Circular Economy Product Design Obligation
Note: Lawyers generally use lenders’ precedents, so lenders
would need to include climate-aligned drafting. LMA (Loan Market Association) endorsement will likely be required to make it market standard.
[Harrison’s Clause] Green Loan “Starter Pack”
[Noah’s Clause] Sustainability-Linked Lending Requirement
[Evie’s Clause] Debt Finance Clauses
[Larissa’s Clause] Promoting Sustainability-Linked Loans
Note that the Certificate of Title is used to flag issues/any climate-aligned drafting already present. As there are unlikely to be provisions in most documents, it could be used to flag the risk of climate change and advise the recipient to take advice from a valuer and a surveyor. Lawyers should, in any event, advise clients of the risks of climate change, and should not rely on this being set out in the Certificate of Title.
Include an obligation on the developer to obtain a climate positive planning permission. See
Consider obliging the parties to execute electronically.
[Rory’s Clause] Net Zero Land Promotion Agreement
[Rory’s Clause] Net Zero Land Promotion Agreement
Consider obliging the parties to execute electronically.
[Harrison’s Clause] Green Loan “Starter Pack”
[Noah’s Clause] Sustainability-Linked Lending Requirement
[Evie’s Clause] Debt Finance Clauses
[Larissa’s Clause] Promoting Sustainability-Linked Loans
Include details of how the borrower must act in a sustainable
way. Needs to be drafted as a non-financial covenant, so that
breach of it would allow the lender to enforce.
Consider relevant provisions from:
Note: Lawyers generally use lenders’ precedents, so lenders
would need to include climate-aligned drafting. LMA (Loan Market Association) endorsement will likely be required to make it market standard.
Facility agreement
[Tomas’ Disclosure Checklist] CLLS Certificate of Title
Note that the Certificate of Title is used to flag issues/any climate-aligned drafting already present. As there are unlikely to be provisions in most documents, it could be used to flag the risk of climate change and advise the recipient to take advice from a valuer and a surveyor. Lawyers should, in any event, advise clients of the risks of climate change, and should not rely on this being set out in the Certificate of Title.
CLLS Certificate of Title
Forward funding agreement
Include obligation to build in a sustainable way. Consider including obligations on the fund to invest in sustainable projects. See
Consider obliging the parties to execute electronically.
[Frank’s Clause] Green Investment Obligations
See
Staff resourcing
[Mary’s Clause] JCT Environmental Obligations
[Mary’s Clause] JCT Environmental Obligations
[Aatmay’s Clause] Repairs and Alterations
Agreement for lease with works
[Estelle’s Clause] Climate Standard of Care (Construction)
Consider what happens if the constructed building does not meet required EPC standards.
requires retrofitting until it does, but this may not be realistic/practical. However, accepting the building as it is and claiming damages does not meet the environmental objective. Ensure that there are appropriate enforcement measures in place if standards are not met. Consider including TCLP's green dispute resolution drafting and obliging the parties to execute electronically.
[Tristan’s Clause] Construction Materials: Procurement
[Luna’s Clause] Net Zero Aligned Construction Modifications
[Madhavi’s Clause] Modern Methods of Construction
[Edgar’s Clause] Landscape Design Projects
[Francis’ Clause] Construction Waste Management
[Estelle’s Clause] Climate Standard of Care (Construction)
[Mary’s Clause] JCT Environmental Obligations
[Rose’s Clause] GHG Emissions Management
Some drafting may be included in the technical documents (e.g. the Employer’s Requirements attached to the contract) rather than in the main body of the contract itself. In construction, Heads of Terms are not used – provisions are included in the contract, which is then put out to tender. Where the government is the employer, TCLP or similar clauses may be used in the initial draft more frequently due to policy pressure (e.g. in the Construction Playbook).
[Olivia’s Clause] FIDIC EPC Contracts
[Tristan’s Clause] Construction Materials: Procurement
[Ashkan’s Clause] Sustainable On Site Working Practices
[Madhavi’s Clause] Modern Methods of Construction
[Francis’ Clause] Construction Waste Management
[Estelle’s Clause] Climate Standard of Care (Construction)
[Mary’s Clause] JCT Environmental Obligations
[Rose’s Clause] GHG Emissions Management
Some of the clauses are the same as for the Building Contract. Olivia’s Clause and Madhavi’s Clause may be relevant for infrastructure projects. If the NEC contract is being used, Secondary option X29 can also be incorporated as well as/instead of TCLP clauses, depending on the nature of the project.
Engineering contract
[Estelle’s Clause] Climate Standard of Care (Construction)
can be inserted on the basis that the consultants should have regard to it when undertaking their designs.
can be used to the extent that consultants are involved in the specification of materials, although the actual use of them sits with the contractor.
[Tristan’s Clause] Construction Materials: Procurement
[Ashkan’s Clause] Sustainable On Site Working Practices
[Mary’s Clause] JCT Environmental Obligations
Also see the Environmental Requirements in
(e.g. protecting and enhancing existing ecological features on site, minimising air and noise pollution, minimising water use and guarding against water pollution, using local suppliers, promoting green travel to and from the site) – although if part of a wider development, these will have been dealt with in the building contract.
Consider whether it is appropriate to specify the fuel used to power the crane. Also consider ensuring that the oversailing area does not interfere with birds’ flight paths.
Consider obliging the parties to execute electronically.
Scaffolding licence
[Ashkan’s Clause] Sustainable On Site Working Practices
[Mary’s Clause] JCT Environmental Obligations
Also see the Environmental Requirements in
although if part of a wider development, these will have been dealt with in the building contract.
Consider obliging the parties to execute electronically.
[Rory’s Clause] Net Zero Land Promotion Agreement
[Rory’s Clause] Net Zero Land Promotion Agreement
[Emma’s Clause] Green Residential Lease Clauses
[Emma’s Clause] Green Residential Lease Clauses
[Ashkan’s Clause] Sustainable On Site Working Practices.
Include obligations to manage the property in an environmentally conscious way (for examples see
Include obligations to only instruct contractors who comply with Green Working Practices. These would need to be defined, for examples see
[Emma’s Clause] Green Residential Lease Clauses
Report on title
Report on lease
[Marni’s Clause] Report on Title – Climate Change Clauses
Report on title
Reporting to your client
Resourcing and maintaining a sustainable workforce
Resourcing and maintaining a sustainable workforce
This tool has been created for England & Wales, but the considerations/drafting can be adapted for other jurisdictions
What to do before you get planning permission
[Marni’s Clause] Report on Title – Climate Change Clauses
Report on lease
[Marni’s Clause] Report on Title – Climate Change Clauses
Report on lease
Irish Green Lease Clauses can be adapted for E&W.
[Amelie & Lauri's Clause]
Also consider obligations regarding the tenant having to source products locally
([Raphael’s Questionnaire] Climate Change DDQ), sustainable travel plans, provision of shower facilities/bike racks, and drafting obliging the parties to execute electronically.
Consider adapting
[Matthew’s Clause] Late Payment and
[Alice’s Clause] Single Use Plastic
Irish Green Lease Clauses can be adapted for E&W.
[Amelie & Lauri's Clause]
can be adapted for commercial leases.
[Emma’s Clause] Green Residential Lease Clauses
[Lotta’s Clause] Renewable Electricity
[Rosie’s Clause] Alteration/Improvement Provisions
[Aatmay’s Clause] Repairs and Alterations
[Hannah’s Clause] Green Service Charge Provisions
([Raphael’s Questionnaire] Climate Change DDQ)
[Matthew’s Clause] Late Payment
[Alice’s clause] Single Use Plastic
[Emma’s Clause] Green Residential Lease Clauses
[Lotta’s Clause] Renewable Electricity
[Rosie’s Clause] Alteration/Improvement Provisions
[Aatmay’s Clause] Repairs and Alterations
[Hannah’s Clause] Green Service Charge Provisions
Commercial lease
[Edgar’s Clause] Landscape Design Projects
Secondary option X29