Green leases all the rage in commercial leasing

The need for a sustainable economy and efforts to combat climate change are rapidly changing traditional markets, including the real estate industry. One relatively new phenomenon is the rise of sustainability practices in lease agreements, generally referred to as "Green Leases". As this term is not yet defined under Austrian law, it remains to the parties of an individual lease agreement to negotiate if and to what extent they want to structure their lease as a Green Lease.

General vs. detailed clauses

The structuring of a lease as a Green Lease, i.e. the extent and depth of the respective regulations, may differ substantially depending on the individual agreement between the landlord and the tenant. The spectrum ranges from generic clauses emphasising that the parties care about the environment and intend to cooperate in good faith in this regard, to highly detailed and extensive provisions establishing specific goals and corresponding responsibilities. In both cases, however, such "green" clauses are often set out explicitly as declarations of intent only, i.e. they do not constitute legally binding obligations.

Examples of detailed clauses

Parties wishing to include more than just a programmatic Green Lease clause in their individual lease agreement may include provisions on:

• the sustainable usage of the leased property, including specific goals for the reduction of energy consumption and waste, the efficient use of water or the preferred use of environmentally friendly products and equipment;
• waste management (e.g. special waste collection systems);
• the use of green energy; or
• the cleaning of the leased property (e.g. use of environmentally friendly cleaning products, mechanical instead of chemical cleaning).

It must be borne in mind that so far there are no explicit legal regulations as to which, or to what extent, such regulations are legally permissible in Austria. Likewise, there is no relevant case law of the Austrian Supreme Court of Justice (Oberster Gerichtshof) on specific Green Lease clauses. So significant legal uncertainty remains, especially with respect to B2C lease agreements.

Energy monitoring and data collection

Another important topic in connection with Green Leases is the collection of data in order to measure the efficiency of sustainability practices, e.g. data on energy and/or water consumption. Such data is extremely important for commercial landlords to achieve their (voluntary) sustainability goals and might soon even become necessary to prove compliance with legal sustainability requirements.

However, applicable data protection laws might pose a significant obstacle when collecting and processing such data. The processing of "personal data", i.e. all information that allows conclusions to be drawn about an individual person, must comply with the European General Data Protection Regulation ("GDPR"). As most relevant data will potentially allow for such conclusions, it is important for the landlord to inform the tenant about which data will be collected and how they will be processed, as well as to obtain, where required, the tenant's consent to such processing.

To bypass any obstacles arising from applicable data protection laws, landlords could refrain from collecting data about the specific leased property, but instead collect anonymous data that do not allow for conclusions to be drawn about individual persons. Anonymous data are not subject to the GDPR. For energy consumption data, this could be achieved by measuring only the total volume of energy delivered to the entire building at the property boundary, provided that the building contains at least five leased properties (minimum group size), only coarsely granular data (i.e. daily, monthly or annual figures) are collected, and there is no personal processing context (i.e. the data may not be used to judge individuals, to influence their behaviour or for other purposes that could impact the rights and interests of a specific individual).

authors: Roman Valach, Maximilian Trautinger