Access to Green Finance Mechanisms UNWTO and IFC Webinar Series
2 ABOUT THIS WEBINAR ________ MATERIALS WILL WEBINAR IS BE SHARED ON BEING RECORDED WEBSITE USE CHAT FEATURE TO ASK QUESTIONS https://www.unwto.org/green-investments-for-sustainable-tourism
3 RETURN TO ‘NEW AND BETTER NORMAL’ POST COVID -19 PROFITS REVENUE COSTS
4 TOPICS COVERED ________ 1. IFC’s offer for green buildings 2. Green building definitions 3. Business case for sustainable hotels 4. Green financing mechanisms 5. Case studies 6. Q&A
5 IFC IS A MEMBER OF THE WORLD BANK GROUP ________ IFC IBRD MIGA ICSID IDA International International Multilateral International International Finance Bank for Investment Centre for Development Corporation Reconstruction Guarantee Settlement of Association and Agency Investment Development Disputes Loans to Interest-free loans Guarantees of Conciliation and Solutions in middle-income and grants to foreign direct arbitration of private sector governments and credit-worthy, investment’s non - investment development. of poorest low-income country commercial risks. disputes. governments. countries.
6 IFC HAS A FOUR-PART STRATEGY TO SUPPORT GREEN BUILDING GROWTH ________ Further Resource: About EDGE
7 IFC’S OFFER FOR GREEN BUILDINGS ________ Long-term loans, warehousing facilities, guarantees and risk-sharing INVESTMENT facilities, structured finance, green bonds Support in identifying investment pipeline, market intelligence, training for loan ADVICE officers & developers, sustained technical advice, CAFI Tool, Green Mortgage Toolkit Global and local marketing campaigns, stakeholder education, capacity MARKET CREATION building, technical guidance, promotion of incentives 7
8 PATH TO CARBON NEUTRALITY FOR THE TOURISM INDUSTRY Deep Super retrofits Clean Carbon efficient for energy neutrality new hotels portfolio TECHNICAL PATHWAYS FINANCIAL PATHWAYS LARGE BANKS INVEST AGGREGATOR VIA CAPITAL VIA LOCAL FINANCIAL DIRECT INVESTMENT MODEL MARKETS INSTITUTIONS
9 UNDERSTANDING GREEN BUILDINGS ________ 9
10 DEFINITION OF A GREEN BUILDING ________ 20 % 20 % 20 % 20% 20% & & BETTER CERTIFIABLY GREEN QUANTIFIED PERFORMANCE AS VERIFIED BY IMPACT REPORTING THAN THE AN INDEPENDENT LOCAL BASELINE THIRD PARTY
11 INTERNATIONAL GREEN FINANCE STANDARDS FOR GREEN BUILDINGS ________ • • • • Used by property developers ICMA releases the Green Bond CBI releases standards for green Global disclosure system and investors to obtain data Principles as well as guidelines bonds funding residential or for investors, companies, on the performance of their for green buildings. commercial buildings. cities, states and regions to • • investments. EDGE is listed as an accepted EDGE is included as a qualifying manage environmental • EDGE can be used completing certification standard. (See certification system. impacts. • the Real Estate Assessment or Section E: Certification Protocol for reporting to CDP the Developer Assessment. Standards). using EDGE is forthcoming, following joint webinar. 11
12 CASE STUDY: ACORN USED GREEN BUILDING DEFINITION TO LAUNCH KENYA’S FIRST GREEN BOND • Kenya’s 1 st green bond for 5 billion shilling (~$50 million) with structuring by Stanbic Bank. • Use of proceeds for new student accommodations that are EDGE certified. • EDGE preliminary and post- construction certificate ensure green standard. • EDGE provides reporting in line with ICMA standards. • Government now made interest from green bonds tax exempt.
13 CASE STUDY: HSBC INVESTS $130 MILLION IN A GREEN LOAN WITH INDOSPACE, FOR REFINANCE OF EDGE-CERTIFIED WAREHOUSES • Green loans are a sister instrument to green bonds, an internationally accepted green mechanism. • HSBC invested $130 million into IndoSpace for a re-finance of a portfolio of EDGE- certified warehouses. • HSBC’s green framework was audited by CICERO, a leading provider of 2 nd opinion in green finance. Further Resource: IndoSpace Press Release
14 EDGE ALLOWS SELF-ASSESSMENT AGAINST INTERNATIONAL STANDARDS ________ ② ACHIEVABLE STANDARD ③ VERIFIED GREEN LABEL ① FREE SOFTWARE 20 % Further Resource: EDGE Software Demo
15 BUSINESS CASE FOR SUSTAINABLE HOTELS ________
16 Further Resource: Business Case for Sustainable Hotels
17 UTILITY BILLS ARE A LARGE PERCENTAGE OF OPERATING COST OF HOTELS ________ Further Resource: Business Case for Sustainable Hotels
18 ROI ON MEASURES NEEDED TO REACH 20% EFFICIENCY FOR NEW HOTELS Incremental Utility Savings / Payback Period Cost month in Years Angola $142,055 $34,745 0.3 Costa Rica $127,700 $10,000 1.1 Indonesia $74,500 $9,300 0.7 Peru $53,000 $14,000 0.3 Philippines $27,700 $22,000 0.1 South Africa $170,000 $14,110 1 Sri Lanka $152,800 $13,200 1 Turkey $85,000 $12,300 0.6 Thailand $35,000 $4,800 0.6 Further resource: Business Case for Sustainable Hotels Sampling of global results, with information for more than 30 countries available from https://www.edgebuildings.com/marketing/research/
19 CASE STUDY: MARRIOT HOTEL IN VERACRUZ, MEXICO IDENTIFIED $87,000 PER YEAR IN UTILITY SAVINGS • Hotel identified tremendous savings through sensible approaches with no incremental costs. • Technical measures included efficient lighting, HVAC, and plumbing. • Utility reduction resulted in $87,000 savings per year. Further Resource: Business Case for Sustainable Hotels 19
20 CASE STUDY: HOST HOTELS FOUND $40 MILLION ROI FROM WATER AND ENERGY SAVING PROJECTS ACROSS EXISTING PORTFOLIO • One of the larges hotel owners and REITs with ~100 properties. • Implemented a range of water and energy measures, including on-site wastewater recycling laundry system, for 70% water reduction. • Numerous awards for effort. Further Resource: Business Case for Sustainable Hotels 20
21 ROI ON RETROFIT MEASURES Improvement for: Payback Period (years) Lighting 2 HVAC and building systems 4 Rooftop solar system 4.7 Building controls 2.7 Refrigeration 1.8 Further resource: Business Case for Sustainable Hotels
22 CONSUMERS AND BUSINESSES ARE LOOKING FOR CERTIFIED GREEN HOTELS • Certified hotels show higher ADR and RevPAR over non-certified properties. • Study by TUI Group found 1 in 10 travelers book a sustainable room, but over half would if they had better labeling. • 53% of North American-based companies have corporate sustainability programs that affect their contract decisions with suppliers. Further Resource: Business Case for Sustainable Hotels
IFC WILL EXTEND MARKETING SUPPORT TO YOU AND YOUR CLIENTS Further resource: EDGE Marketing Toolkit
24 SUSTAINABILITY IS A SOLID INVESTMENT STRATEGY Further Resource: Business Case for Sustainable Hotels
25 BANKS ARE PROVIDING INCENTIVES TO CATALYZE THE MARKET 100% coverage of Lower interest rate, EDGE technical fees, longer tenor & grace global reach period, Costa Rica Lower loan pricing for 10% refund of insurance green construction & premium, Colombia mortgages, Colombia Lower pricing for green Technical assistance & construction & 50% off free certification, certification, Colombia Ecuador 0.5% lower interest rate, significantly longer tenor, free technical assistance Further Resource: EDGE Banking Pages
26 CASE STUDY: SONEVA FUSHI IN MALDIVES INSTALLED SOLAR AT NO COST • Hotel partnered with Yingli Solar to buy power from solar panels installed on their rooftops. • Through PPA with Yingli, Soneva had no initial costs but purchases power 40% cheaper than diesel generators. Further Resource: Business Case for Sustainable Hotels Benefits of on-site solar panels: 1. Decreasing installation costs 2. PPA structuring with no CapEx costs 3. Price security 4. Supply security
27 FINANCING MECHANISMS ________
28 IFC’S OFFER FOR GREEN BUILDINGS ________ Long-term loans, warehousing facilities, guarantees and risk-sharing INVESTMENT facilities, structured finance, green bonds Support in identifying investment pipeline, market intelligence, training for loan ADVICE officers & developers, sustained technical advice, CAFI Tool, Green Mortgage Toolkit Global and local marketing campaigns, stakeholder education, capacity MARKET CREATION building, technical guidance, promotion of incentives 28
29 DIRECT INVESTMENT ________ GLOBAL OR HOTELS PROJECT SPONSOR REGIONAL BANKS LOCAL FINANCIAL INSTITUTIONS Reporting on Self assessment to Training on launching impacts; technical identify green green real estate assistance measures; list of program; direct agreement projects to bank investment by IFC
30 VIA LOCAL FINANCIAL INSTITUTIONS ________ DFIS, INSTITUTIONAL LOCAL FINANCIAL CERTIFICATION AS HOTELS INVESTORS INSTITUTION COMPLIANCE CENTRAL BANK CORPORATE REQUIREMENTS FROM BRANDS Certificate serves as Self assessment to Training on Credit lines; risk compliance identify green launching green sharing; advisory mechanism for all measures; list of real estate program assistance stakeholders projects to bank
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