ESG in Real Estate - Green Leases expert guide in Norway
- Do EPCs need to be provided on sales and lettings and if so, are there any statutory minimum requirements?
- Is there any legislation requiring new or existing buildings to satisfy ESG requirements?
- How widespread are green lease provisions? Are they regulated or market driven? What areas do green leases commonly cover? Do they apply to both residential and commercial leases?
- What do institutional investors and banks/other financing institutions require in terms of the green lease drafting? Is there any market standard approach to green lease drafting? Do you report on the lack of any green lease provisions in your due diligence reports on an acquisition or refinancing?
- How are green lease provisions enforced?
- How widespread is the certification of buildings (e.g. LEED, BREEAM, NABERS, WELL etc.)? Are they regulated or market driven? How is this documented between the Landlord and Tenant?
- Are there any additional regulatory requirements that need to be met or contractual provisions that need to be considered regarding the installation of alternative energy supply systems (e.g. rooftop photovoltaic systems)?
- Are there any regulations relating to soil artificialisation or other biodiversity concerns which impact on new builds and/or refurbishments? How are they enforced?
jurisdiction
1. Do EPCs need to be provided on sales and lettings and if so, are there any statutory minimum requirements?
Yes, EPCs are mandatory for all lettings or sales of residential or commercial properties. EPCs are also mandatory for for all new buildings, buildings undergoing major renovations, and buidlings where more than 250 sqm is used by a public body.
However, it is not required in certain exceptional cases.
As of today, no minimum performance is required.
2. Is there any legislation requiring new or existing buildings to satisfy ESG requirements?
New bulidings need to meet energy requirements set out in the planning and buling regulations, mainly relating to energy efficiency. It is expected that new regulations due to changes in the EU Energy Performance of Buildings Directive, also will imply new regulations in Norway (as part of EEA), however this has not been decided yet.
3. How widespread are green lease provisions? Are they regulated or market driven? What areas do green leases commonly cover? Do they apply to both residential and commercial leases?
Some green lease provisions are generally included in commercial leases. This is not a legal requirement and their inclusion is market driven.
Wording is often adapted from the Norwegian industry standard for commercial leases. This would relate to cooperation on implementing new environmental measures, data sharing & metering, extending Landlord right to do works. There is an increasing use of wording to facilitate installation of solar panels later in the lease period.
Green lease provisions are not generally seen in residential leases.
4. What do institutional investors and banks/other financing institutions require in terms of the green lease drafting? Is there any market standard approach to green lease drafting? Do you report on the lack of any green lease provisions in your due diligence reports on an acquisition or refinancing?
There is no established practice that institutional investors and banks/other financing institutions require green lease drafting, so the cases where banks require such drafting are rather exclusions from general practices. In addition, the lack of green lease provisions is not reflected in our due diligence reports on an acquisition or refinancing.
5. How are green lease provisions enforced?
The enforcement of green lease provisions varies on a case by case basis. The green lease provisions are often focusing on cooperation and good faith provisions, which would not be as relevant to enforce legally.
6. How widespread is the certification of buildings (e.g. LEED, BREEAM, NABERS, WELL etc.)? Are they regulated or market driven? How is this documented between the Landlord and Tenant?
EPCs are statutory and are therefore required for most buildings.
Sustainable ratings which are common in commercial buildings are BREEAM and BREEAM NOR. This is likely to apply to new builds, but also to substantial refurbishments.
In the commercial market, the drive for standards comes from developers/landlords and occupiers. This is particularly true of main office HQ lettings.
In the commercial market, for new builds, the lease contract will include obligations on the landlord/developer to meet the relevant standard.
7. Are there any additional regulatory requirements that need to be met or contractual provisions that need to be considered regarding the installation of alternative energy supply systems (e.g. rooftop photovoltaic systems)?
Yes. Even at a small scale, the generation, transportation (“distribution”) and supply to premises of electricity are regulated activities under the electricity sector specific regulatory regime. There are licence regulations and also regulations on tariffs to be paid for grid use that could apply even if the energy is only distributed locally on the propery. Generally, the parties would want to design the energy production system in a way to avoid licence requirements and to meet an exemtion regime for tariffs made for sharing energy on one property.
8. Are there any regulations relating to soil artificialisation or other biodiversity concerns which impact on new builds and/or refurbishments? How are they enforced?
Yes. Even at a small scale, the generation, transportation (“distribution”) and supply to premises of electricity are regulated activities under the electricity sector specific regulatory regime. There are licence regulations and also regulations on tariffs to be paid for grid use that could apply even if the energy is only distributed locally on the propery. Generally, the parties would want to design the energy production system in a way to avoid licence requirements and to meet an exemtion regime for tariffs made for sharing energy on one property.
