If environmental, social and governance (ESG) factors have shifted from a ‘nice to have’ to core strategic goals in recent times for the hospitality industry, the ‘E’ has tended to drown out the other aspects.
Now, hospitality is wising up to the importance of social commitments, leading to the real estate community and local authorities partnering in much more effective ways, delegates heard today at the International Hospitality Investment Forum (IHIF) in Berlin.
Interviewer Ufi Ibrahim, CEO, EEA said it “seemed like there was a huge opportunity for the public and private sectors to collaborate” as she introduced the panel of city leaders and ESG protagonists.
Dr Hinrich Holm, chairman of the board, Investitions Bank Berlin, said that the bank was trying to show its social support in a number of ways beyond hospitality matters, including “financing young artists in different parts of the city” and by “providing cheap housing as part of a social goal of preventing poverty”.
When it comes to the hospitality industry, and welcoming hotel investors to the city, he said that “an investor presenting with a plan that included social elements, versus an investor presenting with a plan lacking in these factors, would see the first investor win”. However, he conceded that quantifying social values was still a challenge in some sectors. “As a bank, meanwhile, we are rated by a ratings agency with a specific sustainability rating. This has clear criteria on how we engage,” he noted.
Marc Crooijmans, chief innovation officer of the City of Amsterdam said that “the impact of tourism in Amsterdam has been huge over the past couple of years”, and this factor alone had helped crystalize the importance of the S in ESG. “The reason for city authorities being there is to support the people that need it most,” he said. “That’s at the core of what we do. We also try and make space for our own employees to do good. In lieu of the recent energy crisis, city employees could become ‘energy coaches’ to guide people in need on how to save money on energy bills.”
Looking at the impact of tourism on Amsterdam, he said that the city’s “key goal was to make sure that every citizen can live in the city”. When it came to liaising with investors, he said there were “fewer formal regulations and a greater focus on collaboration to find solutions”.
Finally Florian Wupperfeld, ESG Collective leader, and founder of Leading Culture Destinations, introduced a project he has been working on with the City of Berlin. “The world’s first city-led ESG task force is creating a new funding framework for Berlin’s cultural scene,” he said. “This is important because 52 percent of tourists say they come to Berlin because of its cultural fame.”
As ESG aspects translate into shifting valuations their importance has risen, the panel heard. Yet while there is increasing evidence of a ‘green premium’ or a ‘brown discount’ affecting asset prices, Holm said that in the financing arena, investors conforming with ESG factors was more likely to improve the “availability of debt… rather than translate into cheap finance”.
The IHIF has broadened its ESG focus for this year’s event, in response to industry and consumer interest in these matters. Over the three days, the ESG Hub, delivered in partnership with the Energy and Environment Alliance (EEA) and sponsored by EEA, MindClick and Naked Energy, is playing host to a number of lightning talks, thought-leadership case studies and product showcases borne out of the requirement for knowledge, products and services relating to ESG from investors, asset managers and operators.