Tenants directly account for over 50 percent of building energy usage (and thus, a significant portion of building carbon emissions), but owners are often held responsible for whole building energy consumption/decarbonization. How can owners address the tenant’s portion of this? Enter two impactful solutions: green leases and sustainable tenant fitouts.

Building owners and tenants are often characterized by a “split incentive” which hinders joint efforts towards energy-efficient buildings. Why should one party pay for an improvement when the other stands to benefit? The split incentive occurs when the party who pays the upfront costs of an efficiency improvement is different from the one who benefits from future energy savings. This is oftentimes the case in standard commercial leases, which lay out how energy costs are divided between tenants and owners in ways that discourage energy savings.

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