Environmental annex (green lease): allocating energy capex between landlord and tenant

An institutional landlord that holds a Paris office building of 8,000 m² faces a difficulty that is simple to state and complex to resolve: it carries the consumption-reduction trajectory imposed by the tertiary energy-saving scheme (dispositif éco énergie tertiaire), yet it controls neither the uses, nor the tenants' private equipment, nor, very often, its tenants' consumption data. The same landlord discovers, when arbitrating on the asset, that the clause for recharging works that it believed to be sound runs up against the exhaustive inventory introduced by the Pinel Act. The environmental annex, born of the Grenelle II Act and long treated as a signing formality, is once again the central contractual tool for managing the asset. This guide deals with the mandatory content of the environmental annex, its interplay with the Tertiary Decree (décret tertiaire) and the BACS Decree, the contractual allocation of energy capex between landlord and tenant, and the procedural levers available when the tenant refuses to cooperate.

Scope of application: which leases must include an environmental annex

Thresholds, premises concerned, dates of application

The environmental annex stems from Article 8 of Law No. 2010-788 of 12 July 2010 on the national commitment to the environment, known as Grenelle II, codified at Article L. 125-9 of the French Construction and Housing Code (CCH), and recodified at Article L. 174-2 of that Code following Order No. 2020-71 of 29 January 2020. Its content is set by Decree No. 2011-2058 of 30 December 2011.

The text covers leases of premises of more than 2,000 m² used as offices or shops. Three points deserve attention on the institutional landlord's side.

First, the threshold is assessed by reference to the area of the premises let, not the total area of the building. A building of 10,000 m² divided into units of 900 m² is in principle outside the statutory obligation, which does not in any way prevent a voluntary environmental annex from being included, a practice that is now systematic in institutional portfolios.

Second, the material scope is restricted to offices and shops. Industrial premises, logistics warehouses, and teaching or healthcare premises are not covered by the environmental annex, even though they fall within the scope of the Tertiary Decree from 1,000 m². This mismatch of scopes is the first source of error in lease audits.

Finally, the obligation applies to leases concluded or renewed from 1 January 2012, and to leases in progress from 14 July 2013. A lease signed in 2009 and still running in 2026 must therefore include an environmental annex, which acquisition due diligence frequently reveals.

What the environmental annex is not

The green lease is not to be confused with the energy performance certificate, with the energy audit, or with the tertiary energy-saving scheme. The energy performance certificate (DPE) is an information document issued at a given moment. The Tertiary Decree creates an obligation of result under public law, binding persons designated by statute. The environmental annex, by contrast, is a private-law instrument: it organises a reciprocal flow of information and serves as the contractual basis for the energy governance of the asset. It is precisely because it is contractual that it can be enriched well beyond its regulatory core.

Mandatory content: a minimum floor, not a ceiling

The Decree of 30 December 2011 requires a structured exchange of information, followed by monitoring over time.

Information to be exchanged when the lease takes effect

The landlord provides the tenant with a description of the energy characteristics of the equipment and systems of the building and of the premises let, covering in particular heating, cooling, ventilation, lighting, and the other systems linked to the specific features of the building. Symmetrically, the tenant provides the landlord with a description of the equipment that it has itself installed and that consumes energy, foremost among which are IT equipment, server rooms and catering facilities.

This symmetry is the keystone of the energy obligations of landlord and tenant. In an office building, the gap between theoretical and actual consumption is very largely explained by the tenant's uses and by private equipment, which the landlord does not know about unless it has had them declared.

Annual communication of consumption

The parties communicate to each other annually the actual water and energy consumption of the equipment and systems concerned, as well as, where applicable, the quantity of waste generated by the building and collected. The Decree sets no format, no date and no level of granularity. It is for the annex to set them.

An environmental annex properly drafted for an institutional landlord therefore provides for:

• a deadline for transmission, set ahead of the OPERAT reporting deadline of 30 September
• a standardised format, compatible with the landlord's reporting tool
• the level of granularity expected (by use, by floor, by metering point)
• an obligation for the tenant to authorise its energy suppliers to transmit the data directly to the landlord or its service provider
• an obligation to keep the sub-meters in working order and to allow them to be read

This last point is often overlooked. Without reliable sub-metering, the Tertiary Decree trajectory cannot be managed, and the landlord has no means of tracing a deviation back to its source.

The periodic review and the action programme

The Decree requires the parties, after analysing the data, to draw up a review of the changes in the energy and environmental performance of the building and of the premises let, and to commit to an action programme aimed at improving it. This is a joint obligation to act, non-performance of which exposes both parties. In practice, it takes the form of an environmental monitoring committee, meeting at least annually, for which the annex sets the composition, frequency, quorum, convening procedure and, a decisive point, the consequences of a party's default.

The Decree provides for no specific sanction. Non-performance is therefore governed by the general law of contract and of leases: specific performance under Article 1221 of the French Civil Code, damages under Article 1231-1, and, if the annex expressly so provides, a penalty clause or a termination clause (clause résolutoire). An environmental annex with no contractual sanction mechanism is, in a tense landlord-tenant balance of power, a declaratory document with no effect.

Interplay with the Tertiary Decree: who reports, who carries the target

A shared obligation, left to the contract

The tertiary energy-saving scheme stems from Article 175 of Law No. 2018-1021 of 23 November 2018, known as ELAN, codified at Article L. 174-1 of the CCH, and from Decree No. 2019-771 of 23 July 2019, known as the Tertiary Decree. It applies to buildings, parts of buildings or groups of buildings for tertiary use with a floor area of 1,000 m² or more.

The target is an alternative one: either a reduction in final energy consumption of 40% in 2030, 50% in 2040 and 60% in 2050 compared with a reference year that cannot be earlier than 2010, or the achievement of an absolute level of consumption set by order according to the category of activity. The method is specified by the Order of 10 April 2020, supplemented by successive orders known as the "absolute values" orders.

The text designates the owner and the tenant as the persons subject to the obligation, and leaves the allocation of the obligation to the contractual provisions governing their relations. In other words, the law creates joint responsibility and leaves it to the lease to organise it. Silence in the lease protects no one: it exposes the institutional landlord, who remains the natural recipient of administrative formal notices concerning the building envelope and common equipment, without any contractual remedy against the tenant whose uses degrade the trajectory.

The dividing line to be stipulated is economically clear: for the landlord, actions on the envelope, the collective production and distribution systems, and the management of the building; for the tenant, actions on private equipment, the adaptation of the premises to economical use, and the behaviour of occupants. This allocation must be set out in writing, with a timetable that is quantified and accompanied by indicators.

OPERAT, reference year and dependence on the tenant's data

The annual declaration is made on the OPERAT platform run by ADEME (the French Agency for Ecological Transition), before 30 September each year for the previous year's consumption. The choice of reference year is a strategic decision in its own right: choosing a year of high occupancy and high consumption eases the trajectory, while choosing an atypical year exposes the landlord to later challenge. This choice is in principle irreversible in its practical effects, and it commits the asset for several decades. It must be made by the landlord, after consulting the tenant, and not delegated to a technical service provider without the investor's decision.

Yet the landlord can only declare what it holds. The environmental annex must therefore provide that transmission of consumption data is an obligation of result on the tenant, subject to a time limit, and that the tenant bears the financial consequences, including administrative penalties, of any failure or delay in transmission attributable to it.

A breach of the scheme exposes the person concerned to a formal notice, to publication of the breach on a State website, and to an administrative fine capped at €1,500 for individuals and €7,500 for legal entities. The amount is modest; the reputational exposure arising from publication, for a fund subject to non-financial reporting requirements, is not.

Modulations: a technical file to be built before any dispute

The CCH allows the targets to be modulated in cases of technical, architectural or heritage constraints, of a change in activity or in the volume of activity, and of manifest disproportion between the cost of the actions and the expected benefits. The latter is assessed by payback periods whose thresholds are set by the Order of 10 April 2020, differentiated according to the nature of the actions, with works on the envelope benefiting from the highest threshold and regulation and control systems from the lowest.

Modulation requires a documented technical file, submitted on OPERAT. For a tertiary asset whose full decarbonisation would be economically unreasonable, putting this file together early is an act of risk management, not an administrative formality. It determines the landlord's ability to rely on the modulation against the administration and, where relevant, against a purchaser who would invoke the regulatory exposure to renegotiate the price.

The BACS Decree: an owner's obligation with consequences for the lease

Decree No. 2020-887 of 20 July 2020, as amended by Decree No. 2023-259 of 7 April 2023, requires the installation of building automation and control systems in tertiary buildings. The obligation concerns buildings whose heating or air-conditioning systems, possibly combined with ventilation, have a useful rated output of more than 290 kW, and will be extended to installations of more than 70 kW on 1 January 2027. Existing buildings exceeding the 290 kW threshold had to be equipped by 1 January 2025 at the latest. The required standard corresponds to class B within the meaning of the reference standard on the energy performance of buildings. The installation timetable and the building technical management obligations arising from the BACS Decree are set out in our article on that scheme.

Three consequences for the lease follow.

First, the obligation falls on the owner as regards collective systems, which makes it a landlord capex by nature, not transferable to the tenant on the sole ground that it improves operating comfort.

Second, the automation system produces exactly the data that the landlord needs to manage its Tertiary Decree trajectory. The environmental annex must draw the consequences: access for the landlord to the data generated by the system, a prohibition on the tenant disabling or disrupting the control functions, and an obligation to report malfunctions.

Finally, periodic inspection of the systems and verification of the proper functioning of the BACS require access to the premises. This access must be organised by contract, failing which the landlord will have to apply to the court to perform an obligation that the regulations impose on it.

Allocating energy capex: what the Pinel Act prohibits transferring

The exhaustive inventory and Article 606 of the Civil Code

Law No. 2014-626 of 18 June 2014, known as the Pinel Act, introduced Article L. 145-40-2 of the French Commercial Code, supplemented by Article R. 145-35, which requires a precise and exhaustive inventory of the categories of charges, taxes, duties, fees and works connected with the lease, with an indication of how they are allocated between landlord and tenant. On the allocation of charges under a commercial lease since the Pinel Act, see our analysis of the landlord and tenant table and of non-transferable charges.

Article R. 145-35 excludes from what may be charged to the tenant, in particular, expenditure relating to major repairs referred to in Article 606 of the French Civil Code, together with the fees connected with carrying them out, and expenditure relating to works intended to remedy obsolescence or to bring the leased property into compliance with regulations, where they constitute major repairs within the meaning of that same Article 606.

This is the sticking point in allocating energy capex. External thermal insulation, complete renewal of the roof, full replacement of a collective boiler room, and reworking of facades and window frames very generally constitute major repairs. An environmental annex clause that placed these works on the tenant on the ground that they are required by the Tertiary Decree runs up against a mandatory provision and risks being deemed unwritten (réputé non écrit).

The institutional landlord must therefore think in terms of three distinct blocks:

• structural works falling under Article 606, necessarily at its own cost, which it will finance and will have to recover value from elsewhere
• maintenance, equipment replacement and improvement works not falling under Article 606, the cost of which may be transferred by contract, subject to the inventory being drafted expressly
• the tenant's private fit-out, at its cost by nature, and whose minimum performance the environmental annex may regulate

The three-year forecast statement of works

Article L. 145-40-2 also requires the communication of a forecast statement of the works that the landlord plans to carry out in the following three years, with a forecast budget, and of a summary statement of the works carried out in the previous three years, with their cost. These documents are provided to the tenant every three years, within two months after each three-year anniversary.

For an asset decarbonisation plan, this document is not a constraint but a tool. It makes it possible to announce the sequence of works, to document the consistency of the trajectory with the 2030 and 2040 milestones, and to prepare the landlord's arguments at renewal. Failure to provide it, conversely, weakens the landlord's position in any later discussion on passing on costs.

Sharing arrangements: from outright refusal to sharing the gains

The economic difficulty is well known: the landlord finances the investment, the tenant collects the savings on charges. Three contractual mechanisms make it possible to address this misalignment.

The first is a clause for contribution to energy improvement works, under which the tenant takes part in the financing up to a capped amount, in return for a performance commitment from the landlord. It requires rigorous drafting in light of Article R. 145-35 and cannot cover works falling under Article 606.

The second is the sharing of the savings generated, calculated on the basis of a contractually agreed reference consumption and a measurement and verification method set out in the annex. The tenant pays back to the landlord a fraction of the savings recorded, for a fixed period. This mechanism is legally sounder than the disguised recharging of capex, because it relates to a flow and not to investment expenditure.

The third is an adjustment of the rent in return for a commitment to carry out works, negotiated on a renewal or on a new letting, with a timetable for making the improved premises available. This is the most practicable route for assets where re-letting is near.

Realising the value of the investment: rental value, lifting the cap, financing

Improvement works financed by the landlord are not a net cost. Article R. 145-8 of the French Commercial Code provides that improvements made to the leased premises during the lease are taken into account in determining the rental value, and that those made by the tenant at its own expense are taken into account only at the renewal following completion of the works. A significant improvement in the characteristics of the premises made by the landlord may moreover justify, under the conditions of Article L. 145-34, lifting the cap on the renewal rent.

The choice for an institutional landlord is therefore framed as follows: finance the energy capex and realise their value in the rental value and in the exit price of the asset, or leave them to be borne by the tenant and give up any rental value uplift for a long period. The calculation must take into account the discount applied by purchasers and lenders to assets that are off trajectory, and the reporting requirements on investors under the European sustainable finance framework. For Paris tertiary assets, regulatory exposure has become a valuation parameter in its own right, not an extra-financial nicety.

When the tenant refuses to cooperate: the landlord's levers

Characterising the obligation before seeking the sanction

The first lever is one of drafting. The tenant's obligations under the environmental annex to a commercial lease must be characterised as obligations of result, subject to precise time limits, and expressly referred to by the lease's termination clause. An obligation to "cooperate in good faith in the environmental process" cannot usefully be sanctioned. An obligation to "transmit, by 30 June of each year at the latest, the final energy consumption of the previous calendar year, by energy type and by metering point, in the format defined in the annex" can.

Access to the premises to carry out works

The Decree of 30 December 2011 provides that the tenant is to allow the landlord access to the leased premises to carry out works to improve energy performance. This provision must be relayed by a lease clause organising notice, working windows, measures to limit disruption, and the fate of the rent during the works.

Article 1724 of the French Civil Code requires the tenant to put up with urgent repairs that cannot be deferred, and gives a right to a reduction in rent if they last more than twenty-one days, or even to termination if the premises become uninhabitable for the agreed use. For commercial leases, this regime is not mandatory and may be adjusted by contract. The adjustment must however remain measured: a clause depriving the tenant of any remedy, whatever the duration and extent of the works, weakens the whole arrangement in light of the landlord's obligation to deliver the premises under Article 1719 of the French Civil Code.

The procedural sequence

Faced with a tenant that does not transmit its data or refuses access to its premises, the useful sequence is as follows.

A detailed formal notice, referring to the precise clause of the environmental annex, the expired time limit and the loss suffered, in particular the impossibility of meeting the OPERAT reporting obligation.

Failing performance, an application in summary proceedings (référé). An obligation to transmit quantified data that the tenant holds, stipulated in precise terms, is an obligation that is not seriously contestable within the meaning of Article 835, paragraph 2 of the French Code of Civil Procedure, which makes it possible to seek an injunction backed by a periodic penalty. Where access to the premises is in issue, the same route makes it possible to obtain authorisation to carry out the works, if necessary with the assistance of the police.

Beforehand or in parallel, recourse to evidence-preserving summary proceedings under Article 145 of the French Code of Civil Procedure makes it possible to have an expert appointed to record the state of the equipment, the absence of metering or the malfunctions of the control system, and to build up evidence of the breach before any action on the merits.

Finally, a termination clause expressly referring to the obligations of the environmental annex makes it possible, after a commandement (formal notice served by a commissaire de justice, a bailiff) has remained ineffective for one month under the conditions of Article L. 145-41 of the French Commercial Code, to seek a declaration that the clause has taken effect. This route is to be handled with discernment: it is formidable against a fragile tenant, and inappropriate against a flagship tenant whose departure would reduce the value of the asset. Its value lies first in its function as an incentive. The formalities of a commandement referring to the termination clause, on which the clause taking effect depends, are dealt with separately in our article on Article L. 145-41.

Conclusion

The environmental annex is no longer a compliance document: it is the only instrument that allows an institutional landlord to turn an obligation of result under public law, carried jointly with a tenant that it does not control, into enforceable and sanctionable contractual obligations. The position is clear. Almost all the annexes signed between 2012 and 2019 are unusable, because they reproduce the Decree of 30 December 2011 without a time limit, without a format, without a monitoring committee and without a sanction. They must be renegotiated, by amendment or on renewal, and not simply renewed unchanged.

The allocation of energy capex, for its part, cannot be decreed by a blanket transfer clause: it is built block by block, distinguishing what Article R. 145-35 of the French Commercial Code prohibits charging to the tenant, what may be charged to it subject to a rigorous inventory, and what falls under a sharing of gains rather than a recharging of investment.

Before committing to any works programme, have a cross-audit carried out of your lease portfolio and of your OPERAT trajectory: identify the leases that are subject to the obligation and have no annex, check the drafting of the inventory of charges against Article R. 145-35, secure the choice of reference year, and have each item of works legally characterised before entering it in the three-year forecast budget. Capex committed without this preparatory work is capex that can be neither passed on nor recovered in value.

Frequently asked questions

Which commercial leases must include an environmental annex? Leases of premises of more than 2,000 m² used as offices or shops, under Article L. 125-9 of the CCH arising from the Grenelle II Act of 12 July 2010, recodified at Article L. 174-2, and Decree No. 2011-2058 of 30 December 2011. The obligation applies to leases concluded or renewed since 1 January 2012 and to leases in progress since 14 July 2013. The threshold is assessed at the level of the premises let, not of the whole building. Industrial premises and warehouses are not covered, even if they fall within the Tertiary Decree from 1,000 m².

Can the landlord place the Tertiary Decree works on the tenant? Only partially. Article R. 145-35 of the French Commercial Code, arising from the Pinel Act of 18 June 2014, prohibits charging to the tenant expenditure relating to the major repairs of Article 606 of the French Civil Code, as well as regulatory compliance works that constitute such major repairs. Insulation of the envelope, renewal of the roof or replacement of a collective boiler room therefore remain at the landlord's cost. Works on equipment falling outside Article 606 may be transferred, provided that the exhaustive inventory annexed to the lease expressly so provides.

What should be done if the tenant does not transmit its energy consumption? Begin with a formal notice referring to the precise clause of the environmental annex, the expired time limit and the impossibility of meeting the OPERAT declaration of 30 September. Failing performance, an obligation to communicate quantified data, where it is stipulated in precise and quantified terms, is not seriously contestable, which opens the way to an injunction backed by a periodic penalty in summary proceedings (référé) under Article 835, paragraph 2 of the French Code of Civil Procedure. If the termination clause expressly refers to the obligations of the environmental annex, a commandement referring to that clause may be served under the conditions of Article L. 145-41 of the French Commercial Code.

Who is subject to the Tertiary Decree, the landlord or the tenant? Article L. 174-1 of the CCH designates both the owner and the tenant, and leaves the allocation of the obligation to the contractual provisions that govern their relations. In the absence of a clause, both remain exposed, and the landlord remains the administration's natural point of contact for the envelope and collective systems. The allocation must therefore be set out in the lease or its environmental annex, distinguishing actions on the envelope and common equipment from those relating to private equipment and uses.

Does the BACS Decree require works by the landlord in 2026? Yes for existing buildings whose heating or air-conditioning systems, possibly combined with ventilation, exceed 290 kW of useful rated output: the installation deadline was set at 1 January 2025 by Decree No. 2020-887 of 20 July 2020. Decree No. 2023-259 of 7 April 2023 lowers the threshold to 70 kW with a deadline of 1 January 2027, which considerably widens the stock concerned. As regards collective systems, the obligation falls on the owner and cannot be transferred to the tenant by a simple service charge clause.

What sanction applies where a lease subject to the obligation has no environmental annex? The Decree of 30 December 2011 provides for no specific sanction. The breach is therefore governed by the general law: specific performance under Article 1221 of the French Civil Code to compel regularisation, and damages under Article 1231-1 if loss is shown, for example an administrative penalty incurred under the tertiary energy-saving scheme. In practice, the absence of an annex is paid for mainly when the asset is arbitrated, in the form of an audit reservation and a discount negotiated by the purchaser.

Do energy works financed by the landlord make it possible to lift the cap on the rent? Improvements made to the leased premises during the lease are taken into account in determining the rental value under Article R. 145-8 of the French Commercial Code. A significant change in the characteristics of the premises resulting from works carried out by the landlord may justify lifting the cap under the conditions of Article L. 145-34. The assessment is case-by-case and requires the nature, extent and cost of the works to be precisely documented, which the three-year summary statement under Article L. 145-40-2 facilitates. Improvements made by the tenant at its own expense, conversely, are taken into account only at the following renewal.