CANADA Trends and Developments Contributed by: Isabella Tamilia and Alexander Rigante, De Grandpré Chait
regions where ESG rules are stricter or manda - tory. Leasing The space that a large corporate tenant chooses to lease has the potential to directly or indirect - ly impact its ESG commitments. Accordingly, commercial tenants are seeking more energy- efficient spaces in which they can satisfy their ESG commitments to their stakeholders. This, in turn, will reduce their energy consumption and operating costs. For their part, with commer - cial buildings being among the biggest energy consumers, landlords are trying to attract and retain tenants by using sustainable materials and appliances (ie, upgrading heating, ventila - tion and air-conditioning systems, which reduc - es energy consumption) and by changing their operational procedures which, in turn, will make their buildings more marketable. As a result, throughout 2023, there has been a significant rise in “green leases” in Quebec. These promote improved building energy con - sumption by incorporating sustainability into key clauses of a lease, and are intended to encour - age collaboration between landlords and ten - ants to achieve sustainability-focused results. To serve as a roadmap for landlords and tenants, the Building Owners and Managers Associa - tion (BOMA) created a guide on green leases so parties can collaborate on sustainable practices, providing clauses to which they can refer during lease negotiations. Moreover, as technology is rapidly evolving and new opportunities are aris - ing to improve buildings and reduce energy con - sumption, the green lease trend is expected to accelerate in 2024. Financing Sophisticated real estate lenders and investors are increasingly incorporating ESG factors when
evaluating the financial risks involved in a real estate project, which is now commonly known as “sustainable” or “green” financing or invest - ing. It has been noted that Quebec lenders are increasingly integrating ESG criteria into their due diligence process and working with borrow - ers towards achieving sustainability throughout the duration of the loan. Montreal is establishing itself as a global centre for green financing, backed by a financial and business community with a strong ESG focus. On the financial side, Desjardins, a Quebec- based institutional lender, has recently intro - duced incentives such as cash back to encour - age companies to invest according to ESG criteria and has committed to providing training in sustainable development to its employees, advisers and professionals to support transpar - ency and reporting in sustainable finance. Key Montreal-based players with a growing global presence, such as National Bank, iA Financial Group, BDC and Fiera Capital, are also increas - ing their focus on green financing. On the developer side, with the first phase nearing completion, the Royalmount project, the largest private development in Quebec, is one of the only 100% carbon-neutral mixed-use developments in Canada as well as the largest LEED Gold-certified retail project in Canada. The original Royalmount project was modified to add more housing and green space. Examples of Royalmount’s sustainability efforts include the use of geothermal energy and a rainwater recov - ery system, white or vegetation-covered roofs, and the installation of 148 electrical charging stations in the underground parking lot, which significantly exceeds the minimum number required for LEED certification. The financing of the first phase of Royalmount was completed in
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