Global Market Resilience
There are direct links between the health of the planet, and the health of the economic and financial system. As climate risks and biodiversity losses rise (be they acute or chronic manifestations), so too does the risk of direct impairment to real estate values and to hotels & lodging cash flows. Physical and transition risks are expected to impact a significant number of hospitality assets globally. In the near and mid-term, energy, water, CO2e emission levels (relative to national requirements), access to labour, resilience of the value chain, plus technological advancements and changes in consumer behaviours will have a continually rising impact on asset values.
The ability of financial markets including insurers, lenders, and investors, to make necessary price corrections over time and consequently accelerate sustainability action, relies on audit grade data and effective benchmarks. Coupled with greater transparency, globally accepted metrics on environmental, social and governance practices, will have a significant impact on improving investor and asset manager decisions (strategic planning, risk management and capital allocation decisions) in the hotels & lodging sector. Uniform reporting standards and metrics will also facilitate better informed consumer purchasing decisions. Particularly, the business and corporate travel market. It is estimated that Europe alone spends €120 billion annually1 on business travel.
The Role of Sustainability Reporting Standards
The International Financial Reporting Standards (IFRS) and International Sustainability Standards Board (ISSB) are supported by the International Organization of Securities Commissions (IOSCO). They are responding to the demands of the G7, G20 and Financial Stability Board to develop standards that will result in a high-quality, comprehensive global baseline of sustainability disclosures focused on the needs of investors and the financial markets. IFRS S1 and S2 standards (attached) are interoperable with the European Union’s Corporate Sustainability Reporting Directive (CSRD), and numerous governments across the globe have started to adopt and mandate these standards into national law.
IFRS S1 and S2 standards require an entity to disclose information about all climate and sustainability-related risks and opportunities that could reasonably be expected to affect the entity’s cash flows, and access to finance or cost of capital over the short, medium, or long term. The standards also prescribe how an entity prepares and reports its climate and sustainability-related financial disclosures. They set out general requirements for the content and presentation of those disclosures so that the information disclosed is useful to primary users in making decisions relating to providing resources to the entity.
The IFRS/ISSB are now focusing on the development of Human Capital and Nature/Biodiversity standards. They also plan to revise sector specific standards (former SASB standards). Similarly, the European Commission recently announced their intention to develop sector specific standards for sustainability reporting and disclosures.
Structure for setting out core content in IFRS S1 and IFRS S2 reporting
The Role of the Hotels & Lodging Sustainability Standards Taskforce
Given the significance of climate and sustainability risks and opportunities on a company’s prospects the development of effective and uniform reporting standards are critical to the resilience of the global financial system. The ongoing evolution of general standards is driving a paradigm shift in asset management and operational management of hotels & lodging real estate. Investors and managers are seeking guidance on reliable, auditable, comparable and industry relevant benchmarks. The Energy & Environment Alliance (EEA) firmly believes that working with the IFRS/ISSB and regulators including the European Union, is the most effective and timely way to achieve uniform sustainability reporting and disclosure requirements for the hotels & lodging sector.
The Taskforce on Hotels & Lodging Sustainability Standards (Taskforce) has been established by the EEA to achieve industry-wide agreement on sector-specific sustainability-related standards, financial metrics, and benchmarks. The Taskforce aims to lead an inclusive and transparent process aligned with the work of the IFRS/ISSB and to support proposed revisions to the former SASB sector-specific standards for the hotels & lodging sector.
In addition to engaging with regulators, the Taskforce will benefit from the input of CRREM (Carbon Risk Real Estate Monitor), BREEAM (Building Research Establishment Environmental Assessment Methodology), King’s College London and other technical experts, to test the effectiveness of outputs including industry descriptions, definitions, disclosure topics, metrics, and technical protocols. The EEA will fund the development and ongoing revisions to Taskforce outputs by licensing materials for use by the sector.
Global Outreach
The structure of the hotels & lodging sector has evolved considerably over time and is now highly fragmented. The Taskforce aims to gather views from all stakeholders in the sector and all regions of the world to better understand investor needs, and the impact of policies on large, medium, and small enterprises. Consulting the global industry enables the EEA to test the effectiveness of policies, standards, metrics, and benchmarks for the sector.
Global Consultation
There will be three stages to the initial process: pre consultation, the consultation and post consultation. The pre consultation stage (commencing in September 2024) will involve global outreach via multiple communication channels including campaigns to ascertain industry priorities, build awareness, and promote the importance of participation in the consultation process. Industry engagement will include face-to-face meetings; dialogue and deliberation events; and roundtables. Evidence gathered during this stage will be used to frame the consultation including broad topics and specific questions related to revisions to the former SASB sector specific standards.
The consultation itself will run for 90 days. It will be provided in a wide range of formats (for written submissions), accessible via an online link. Access will be promoted via multiple channels including trade press, social media, publications, conferences, and global events.
The EEA will engage the industry’s biggest international conferences and events in all three stages of the Taskforce process. Regional roundtables will be created to steer campaigns, industry input and written submissions to the consultation in Europe, Africa, Middle East, North America, South America, and Asia Pacific (including Australasia).
The post consultation phase will focus on the analysis of written submissions and further evidence gathered via roundtables and dialogue sessions with sector participants. The analysis will underpin the formulation of conclusions and recommendations. The recommended standards, metrics and benchmarks will be presented to the IFRS/ISSB, EFRAG and other global, regional, and national regulatory institutions. They will then be licensed by the EEA to the industry and updated on a regular basis.
Taskforce Roles and Responsibilities
- The Taskforce will work to ensure a robust, transparent, and inclusive process by ensuring that:
- all industry participants have equal access to the consultation across all international markets,
- mutual understanding across all jurisdictions leading to wide-ranging evidence from a diverse group of participants,
- a balanced view is achieved where consensus Is not possible.
- Framing consultation questions (quantitative and qualitative, broad, and specific).
- Setting stakeholder expectations, ensuring transparency.
- Bringing scrutiny to ensure global outreach and equal access to industry at large.
- Targeting relevant stakeholders.
- Engaging decision makers throughout the process.
- Setting evaluation criteria and reviewing submissions.
- Supporting analysis of submissions, conclusions, and resulting recommendations.
- Reviewing process and improving future iterations.
The Timeline
The Taskforce aims to present the results of the global industry consultation and recommendations (for the revision of former SASB sector specific standards) to the IFRS/ISSB by end of 2025. The timeline covering all three phases of the process are as follows:
The first meeting of the Taskforce will take place at 15.00 BST on 11 September 2024.
Members of the Taskforce
Navneet Bali, Founder & CEO, LyvInn, and Chair, EEA Reporting & Disclosures Committee
Janine Guillot, Former CEO SASB and EEA Advisory Board Member
Ufi Ibrahim, CEO, EEA
Fredrik Korallus, Founder & CEO, Dean Street Projects
Tom Wilson, Head of Delivery – Building Performance Services, Bre Group
Franck Bermond, VP Design & Construction, and Head of Group ESG, AccorInvest
Anthony Bailey, Co-Founder & CEO, Mobius Carbon
Olivier Granet, CEO, Kasada Group
Tasos Kousloglou, CEO, SHKP
Theodor Kubak, Supervisory Board Member, Hospitality Asset Managers Association
Catherine Dolton, Chief Sustainability Officer, IHG
Ross Petar, Head of Hotel Asset Valuations, JLL
Inge Huijbrechts, Global SVP Sustainability, Security and Corporate Communications, Radisson
Joshua Wong, Director, Corporate Responsibility and Sustainability, The Hong Kong and Shanghai Hotels Group
Caroline Tiveus, Chief Sustainability Officer, Pandox
Michael Grove, CEO, Hotstats and Board Member, USALI
Dr Marc Lepere, Head of ESG, King’s Business School
Jamie Craze, Business Analyst, Omnevue
Alice Strevens, Director, Human Rights & Social Impact, Mazars
Jacqueline Kneebone, Head of Sustainability & Wellness, Lore Group
Peter Till, Advisory Board Chair, EEA
Young Nguyen, Founder & CEO, d2o
Elizabeth Davies, Head of Hotels & Lodging, HSBC UK
Glenn Mandziuk, CEO, World Sustainable Hospitality Alliance
Amanda Braun, ESG Manager, KSL Capital
Marianne Balfe, Head of ESG, Highgate
Will Silverwood, Head of Sustainability, Whitbread
Dr Sven Bienert, Carbon Risk Real Estate Monitor
Angela Lille, Head of HR Systems and Travel Management, Erste Group, Founding Member, Business Travel for Europe and Austrian Business Travel Association
