A post from our ESG Committee.

Across bustling Asian cities, heritage practices hold strong even amidst modern city lifestyles. Could this juxtaposition between local traditions and contemporary living be the key to sustainability for APAC’s serviced apartments?

Sustainability has become imperative for the serviced apartment sector. As a point of reference, the Sustainable Hospitality Alliance outlines that for the industry to align with the Paris Agreement's emissions targets, carbon emissions per hotel room need a 66% reduction by 2030 and a 90% reduction by 2050[1]. This indicates the importance of preventing the sector's projected growth from directly increasing overall carbon emissions. However, there are many more complexities to consider.

As Ms Beh Siew Kim, Chief Financial & Sustainability Officer, Lodging, CapitaLand Investment and Managing Director, Japan and Korea, The Ascott Limited (Ascott) points out; “Profitability and sustainability are often deemed as competing priorities, but in fact, they are complementary priorities which go hand-in-hand. A key challenge therefore lies in shifting people’s mindsets, from regarding sustainability as a cost, to viewing it as a window of opportunity to drive climate action.” This shift becomes increasingly pertinent considering the evolving ESG landscape and cultural nuances of the APAC serviced apartment sector.

APAC’s Diverse Serviced Apartment Industry

APAC’s serviced apartment industry increasingly faces rising consciousness amongst guests, corporate sustainability supplier requirements and climate change impacts on its operations. However, sustainability strategies cannot take a one-size-fits-all approach. The APAC region faces nuanced sustainability challenges driven by its vast geographical spread, infrastructure gaps, local climate and increasing operating costs.

For instance, in Singapore, sustainability initiatives differ widely between larger established players surrounded by greenery and newer boutique properties in the downtown area. In addition, co-living spaces have emerged as competitive alternatives to serviced apartments for assignees on lower budgets[6]. Zooming out across Asia Pacific, market structures and challenges vary dramatically. In Phnom Penh, a handful of global brands co-exist with local landlords operating informal furnished rentals, leading to fragmentation. Myanmar faces civil unrest, while Jakarta struggles with severe traffic congestion. Hong Kong contends with frequent typhoons amid a changing climate. Every location has diverse environmental, social, linguistic and cultural nuances.

Ascott is one of the serviced apartment providers that recognizes the importance of keeping local cultural values in mind. With an extensive network of in-market teams led by Regional and Country General Managers, they have the capability to localize in-market activations, particularly in geographies where universal policies do not apply.  Sharing best practices across regions is one technique that has delivered success within their APAC teams.

Market Differentiation Through ESG and Cultural Context

Blending traditional values and practices with modern ESG initiatives adds local relevance and meaningfulness to sustainability efforts across APAC. Integrating cultural contexts brings depth to realizing positive regional impact. Incorporating traditional values into ESG programs also makes them more relatable and effective. Realizing this requires proactive, continuous stakeholder engagement on all fronts to reshape mindsets.

For instance, the prevalent Asian principle of 'harmony with nature' aligns with sustainability goals, as does Japan’s 'mottainai' concept of regretting waste. Serviced apartments able to bridge localized variances through tailored initiatives aligned with cultural values stand to lead APAC’s sustainability progress. The path includes supporting not just environmental aims but also workers and communities. For example, Ascott’s commitments to education programs in Indonesia and a partnership with the WWF in Batangas, The Philippines, reflect these nuanced initiatives.

Enhancing Guest Experience through ESG

Prioritizing sustainability through the lens of cultural practices does not just benefit the environment - it can also enhance the guest experience. This was shown by Singapore's Treetops serviced apartments, where green initiatives significantly improved indoor air quality[2].  Serviced apartments in APAC that have embraced ESG initiatives often report higher guest satisfaction, owing to a growing preference for sustainable and responsible travel options. Features like energy-efficient lighting, water-saving fixtures, and locally sourced food reduce environmental impact and offer guests a unique, authentic experience. This duality of environmental responsibility and enriched guest experience can drive business growth and reduce costs.

As a Global Sustainable Tourism Council (GSTC) member, Ascott aligns its practices with benchmark sustainability goals. As Beh Siew Kim noted, “Responsible business among consumers has further translated into determining criteria when it comes to selecting partners. On the corporate front, we have seen a rising importance placed on selecting corporate partners who can demonstrate clear ESG practices.”

Evolving Regulation and Governance

Changes in the governance space may also accelerate ESG practices in the APAC region. There are clear indications that fragmentation in sustainability reporting will give way to consolidated standards for transparency and performance tracking. Guided by major bodies including the International Financial Reporting Standards (IFRS), the Global Reporting Initiative (GRI), and the International Sustainability Standards Board (ISSB), companies can expect aligned directives for communicating their eco-conscious policies, targets, and impacts to stakeholders. As leaders navigate this transition in sustainability measurement and disclosure, players understanding both universal guidelines and location-specific requirements will be able to transform reporting into a mechanism for strategic advantage.

Looking Forward: The Future of Sustainability in APAC’s Serviced Apartments

APAC’s serviced apartments are evolving towards prioritizing sustainability, influenced by economic trends, market demands, and technology integration. Future strategies may include smart technologies for efficient resource management, carbon offsetting initiatives, energy management and waste reduction. Other potential approaches are increased guest participation in sustainability and enhanced partnering with local artisans, suppliers, and waste reduction initiatives. As newer properties come online, new methods for offsetting or reducing embodied carbon and other initiatives are expected[5].

Conclusion

In Asia Pacific's diverse serviced apartment sector, sustainability necessitates balancing global consistency with regional relevance. While universal environmental and social priorities apply, embedding sustainability requires including location-specific cultural and traditional practices. The path ahead is for players to keep sustainability central to offerings through smart technology, carbon accounting, guest engagement and local partnerships. With consumers becoming more conscious of their choices, they are more likely to support businesses that align with their values.

With the regulatory landscape driving transparency through increasingly unified reporting frameworks, the need for robust data, transparency and clarity will only increase. Although the road to decarbonization is long and complex, cross-sector collaboration blends tradition with new solutions. Cultural insight might be the missing link for ESG and enhanced guest experiences that pave the way to scalable climate action and nurturing APAC’s local communities.

This article originally appeared in the Global Serviced Apartment Industry Report APAC Q4 2023, available at https://www.ariosi.com/gsair