UK – Retail asset owners including Hermes Real Estate and Prupim have agreed a deal with retailer Marks & Spencer to introduce green clauses in existing leases for 70 of its UK stores – the largest UK agreement of its kind to date.

Keith Budgen, executive director of landlord organisation UK Better Buildings Partnership, which signed the deal on behalf of its members, said the deal went some way towards breaking down barriers between landlords and tenants.

Part of the problem for investors to date has been persuading tenants to add value to an asset they do not own. 

Budgen said this week's announcement indicated there were benefits for both signatories.

"For retailers, there's an element of PR – to show they have strong social responsibility policies," he said. "But it's fundamentally about business risk and the bottom line."

Meanwhile, investors had to deal with environmental regulations "that aren't going away", he said.

"The fundamental driver for investors is risk," he said. "This isn't a question of being nice – it's a question of dealing with the macro issue of climate change and the requirement to fulfil a fiduciary duty to ensure the long-term future of the asset." 

The memo – a transitional structure that allows landlords and tenants to agree environmental improvements alongside an existing lease – avoided potentially lengthy delays before existing leases come up for review. 

The M&S version will be tweaked for each of the stores depending on, for example, whether they are located within shopping centres.

Asked whether this week's deal would open the floodgates for more retailers to engage with landlords, he said: "It would be nice. Wherever you see practical impact, rather than a theoretical possibility, it will make people think about doing it."

He said the partnership had already been approached by a retail consortium keen to introduce green memos following the announcement this week.

A survey published earlier this month by property fund manager Union Investment suggested UK investors were significantly ahead of their German counterparts at least in planning to introduce green leases – 40% against 15% – although both lagged behind French investors (70%).

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