Sustainability is no longer an optional add-on when it comes to investment in the hospitality sector but is now a critical pillar in decision-making processes.
From an understanding of ESG being integral to investment-facing job roles in future to the growing financial pressure on banks to demonstrate sustainable lending practices, experts at the Energy & Environment Alliance’s Sustainability Symposium warned environmental considerations are quickly becoming a core part of investment strategies.
Evolution of ESG in Decision-Making
Alexander Garrod, managing director at Pro-Invest Group noted an increase in the incidence of ESG considerations being integrated early into transactions and influencing due diligence.
“ESG officers are a lot more prevalent than they were five years ago and are now involved much earlier in the dealmaking process. They're really setting the standard that the investment should be trying to achieve, the work that’s going to be undertaken and the cost and the timing to achieve that.”
David Kellett, managing director, head of Alternative Investments Europe at Invesco goes even further, stating that an understanding of ESG will become a core part of investment and asset management roles.
“In the next five years, an understanding of ESG is going to be a core part of the role of investment managers and asset managers. ESG has become part of the real estate decision making. In the past it was essentially just a sideshow but now it has to become fully embedded in how we make decisions.”
Ioanna Paschalidou, managing director & head of portfolio management at Henderson Capital Partners agrees, noting that while the focus was previously just about obtaining certifications, that’s no longer the case, especially when trying to appeal to institutional investors.
“Now what we see is we need to include the CRREM analysis, what's the net zero pathway for that asset? We’re looking at EU taxonomy compliance as part of the due diligence process alongside everything else we used to do before. Although we didn't look at these things in such a focused manner for hospitality assets in the past, this will be the case going forward.”
To read the rest of this article, please visit our sister site, Hospitality Investor.