According to the Association of Polish Retail and Service Employers (ZPPHiU), landlords should agree on and propose a standardized approach to “green lease clauses” for shopping mall agreements. It is crucial that these provisions ensure a balanced allocation of responsibilities between both parties and bring mutual benefits—not just advantages for mall owners.
While mall representatives often emphasize their ESG initiatives and environmental policies, they fail to demonstrate tangible benefits for the environment or actual cost savings for tenants. This lack of transparency, especially regarding rising common costs, highlights the need for clear examples of savings and well-defined ESG implementation strategies.
Landlords’ Claims vs. Reality
Mall owners argue that green clauses offer tenants advantages such as cost savings, risk reduction, and operational optimization. However, concrete evidence supporting these claims—such as detailed reports or examples of tenant savings—is rarely provided.
Green clauses are also marketed as helpful for tenants in meeting reporting requirements under the EU’s Corporate Sustainability Reporting Directive (CSRD), but landlords fail to explain how these clauses directly assist in this process.
Tenant Concerns and Challenges
“Now is the time to discuss the standards for green lease clauses in shopping malls. Landlords have no clear plans to achieve environmental goals and fail to propose such plans to tenants. ESG reporting obligations rest with property owners, not tenants, many of whom are not required to report in the near future. Large companies, however, must calculate the carbon footprint of products from raw material to store shelf, requiring data that mall owners should provide to tenants,” said Zofia Morbiato, General Director of ZPPHiU.
During the 3rd ZPPHiU and PSNPH Congress, participants noted that many tenants negotiate green clauses based on common sense, which is a positive direction. However, hidden costs—often embedded in regulations unrelated to environmental policies—remain a concern. For instance, there are no known examples of landlords providing tenants with reports detailing savings achieved through implemented environmental measures. Additionally, costs for sustainability certifications like BREEAM are passed on to tenants, but the actual benefits of such certifications remain unclear, apart from enabling landlords to secure cheaper financing.
Shifting Costs to Tenants
Green lease clauses often lead to increased costs for tenants, with little justification. For instance, landlords may demand the replacement of high-quality flooring, storefronts, or installations in tenant spaces—actions that neither benefit the environment nor improve the customer experience.
Unilateral modernization of common areas by landlords, without tenant consultation, also contributes to rising service charges. Such practices negatively affect tenants’ profitability and highlight the lack of partnership in business relationships.
Legal Framework and Responsibility
Polish law lacks specific regulations governing lease agreements for commercial spaces in shopping malls. Unlike residential leases, these agreements are designed to generate profits for both landlords and tenants. However, investment, legal, and administrative responsibilities rest primarily with property owners—not tenants.
For example, energy consumption measurement systems and infrastructure modernization fall under the landlord’s purview. When presenting lease offers, landlords must calculate and account for all costs they will incur during the lease term, assuming the associated business risks.
Negotiating Green Clauses
Green lease clauses should be negotiated to ensure fairness. Current EU ESG requirements for properties apply to landlords and do not mandate modernization but rather focus on reporting environmental impacts. Tenants should have a say in these clauses and receive information about the carbon footprint of mall operations.
Existing shopping centers require continuous investments due to aging infrastructure and evolving EU regulations. These obligations—ranging from safety compliance to adherence to new standards—are legally the responsibility of property owners. However, landlords often attempt to shift these costs to tenants, who advocate for balanced risk-sharing in lease agreements.
Key Topics from the ZPPHiU and PSNPH Congress
These issues were extensively discussed during the 3rd ZPPHiU and PSNPH Congress, where participants presented potential risks and solutions to protect tenants. The primary focus was on green lease agreements and strategies for reducing investment costs through effective negotiation and cost control.
For the first time, the Congress also revealed insights into customer expectations for shopping malls and introduced a new tool for evaluating customer experience at both the mall and individual store levels.
Source: Manager Plus