Tourism and Sustainable Investing

Green Financing for Tourism SMEs in Mauritius

Tourism serves as a catalyst for economic growth in Mauritius, yet it continues to be confronted with a multitude of challenges encompassing impartial revenue generation, resource utilisation, waste management, and evolving customer preferences.

The Sustainable Island Mauritius project (co-funded by the European Union, from 2018 to 2022), champions a pro-handprint innovation approach, aspiring to envision a destination where the whole of the tourism value chain develops sustainable tourism products through innovation, ultimately leading to tourism creating sustainable solutions for local challenges.

This initiative strives to support tourism operators in integrating sustainability principles into their daily operations, aiming to achieve a Green Destination status by 2030. The Tourism Authority facilitates this transition through capacity building, workshops, co-creation meetings, personalised coaching, and various awareness campaigns targeting both tourism stakeholders and the public.

Green Financing to Support Tourism's Sustainable Growth

A critical aspect we focus on is Green Financing, where we utilise our platform to educate tourism operators about current and upcoming opportunities for financing sustainable equipment and products. Our project is geared towards aiding small and medium-sized enterprises (SMEs) in the tourism sector to transition towards a new, innovative, and sustainable growth trajectory. However, many SMEs face significant challenges in accessing finance, including high-interest rates, complex application procedures, and stringent collateral requirements.

To address this issue, we engaged in discussions with the Mauritius Bankers Association in 2022, which led to the e-pamphlet "Applying Green Strategies for Building Back Better", helping enhancing SMEs' competitiveness through resources and advice on:
1. Understanding green financing opportunities available to tourism SMEs;
2. Exploring the various financing schemes that support the green transition and subsequent investments; and
3. An e-directory showcasing organizations offering green and innovative technologies.

This e-pamphlet has been widely distributed to tourism operators and is easily accessible for download.

We firmly believe that these initiatives help set Mauritius on the course to emerge as a prominent and sustainable island destination.

Sustainability Leadership at the Policy Level to Promote Bold Measures

Going green is usually associated with a substantial amount of up-front investment in some areas of activities where capex are involved. While the returns are positive on the medium to long term, SME’s do find this investment as a financial burden, especially when they don’t have access to the support from financial institutions and/or the authorities.

It is thus important that policy makers activate bold measures to encourage green transitions at all levels of the economy through special schemes to support the SME’s on specific investments that would be of added value to the industry. For example, schemes to attract investors in green technologies can be supported as a way to boost a diversified and competitive environment. Third party certification is another area of concrete actions that can be supported by policy makers, ensuring that the impacts of green investments are being measured and thereafter recognised, for the benefit of the destination.

Channeling More Capital to Small Businesses with Big Impacts

The UnTours Foundation launched the Reset Tourism Fund specifically to solve the problem of access to capital for small tourism businesses who have embedded positive social and environmental impact into their operations.

Small businesses represent 80% of tourism enterprises, but not enough funding is flowing to these companies on the frontlines of the travel industry who are rooted in local communities, creating local jobs, and playing a key role in the tourism value chain. More capital – specifically more flexible and affordable capital – needs to go to these businesses.

There is immense potential in the collective actions of these small enterprises if they can expand their operations and scale their sustainability and community benefit efforts, particularly if aligned investors can provide technical assistance in these areas (as we do).

Through the Reset Tourism Fund, we are creating the roadmap for this model of transformation and hope many other investors follow in our footsteps, because the world needs these businesses to accelerate their movement towards more sustainable operations, and that movement takes capital.

Scaling Sustainability Leaders to Accelerate Change

In order to facilitate the change we want to see in the world, investors need to find a way to do small, at scale. The microfinance industry has walked that path (though not without some valid critique), but we need to find a way to help those most successful small businesses scale up their business operations and sustainability efforts.

We don’t want the most successful, sustainable micro or small businesses to stay that size. If they’re setting the standard from a sustainability perspective, and doing so in a way that produces profits, then it’s incumbent upon impact-focused investors to find ways to get them the capital they need and deserve.

There are a few small funds (like ours) out there, but not nearly enough. It’s not easy. It takes flexibility, creativity, and a comfort with risk. But the rewards are immense if we can figure it out.

Green Investments to Support the Energy Transition of Hotels

In each tourism section – whether its’ transport, accommodation or activities – there are different focus areas when it comes to investments. Regarding the hotel sector, we see more and more hotels incorporating a sustainable approach, with a major focus on the environmental dimension, in particular the reduction of greenhouse gas emissions.

When you are looking at a hotel there are a few areas you can prioritize to reduce your emissions, e.g sourcing food locally, reducing waste or encouraging guests to take public transport to reach the destination where the hotel is located. One of the most significant but also more costly impact areas for emissions reductions is making changes to the building itself or the energy system the hotel is using to heat, cool or illuminate the building. Hotel owners can install solar panels on their roofs, invest in energy storage solutions or renovate the building to make it more energy efficient or even energy self-sufficient. Investments are essential for this transformation. That’s why the role of banks is as important as ever by giving out loans to support the transition that hotels are going through to stay in line with the Paris Agreement.

Deutsche Kreditbank AG (DKB) has worked with Hotel Rehlegg in Bavaria to support the hotel’s sustainability journey. For German speakers, more information on this example is available through this podcast episode ("Entschieden Nachhaltig" #3 Wellness-Hotel Nachhaltigkeit umsetzen mit Hannes Lichtmannegger vom Hotel Rehlegg).

Investing in Sustainable Solutions Beyond the Four Walls of Your Hotel

One thing I would like to see more in loan requests is hotels thinking more from a destination perspective rather than focusing solely on each individual business.

Today, the installation of solar panels on roofs is widespread and it is important for hotel owners to keep up with technological developments in order to benefit from them. However, hotels also have important opportunities to help scale sustainability solutions, when their investment decisions take the whole destination and surrounding communities into consideration.

This may mean, for example, using heat generated from industrial waste of local businesses (such as bakeries) as an energy source; or cooperating with community stakeholders to install wind turbines to produce energy for the whole community, including for households and businesses like hotels alike.

Any hotel owner, when planning to make some large investments in their building, should consider the following questions:

• What can I give back to make this destination a better place for visitors and locals alike?
• Who else could benefit from it?
• With whom can I cooperate to find the best possible local solution to make my business and the destination more sustainable?

Rewilding Europe Capital: scaling up Europe's nature-based economies

At Rewilding Europe we want to show that rewilding and wildlife comeback can support the growth of new business, jobs and income. By building this "business case for the wild", we can provide new opportunities for Europe's rural economies – which today are often associated with economic stagnation and decline, rural depopulation, and land abandonment. With nature-based tourism, one of the fastest-growing tourism sectors in Europe, the potential for growth is significant.    

Yet despite its capacity to breathe new life into rural economies and communities, the recovery of nature is not always perceived as an economic opportunity. Europeans, who mostly live in nature-deprived urban areas, are looking for true nature-based tourism opportunities - not just destinations with breathtaking views, but landscapes where exciting wildlife is abundant and accessible. At the moment, truly wild areas in Europe are rare and often lack the type of nature-based tourism experiences available in other places, such as Africa and North America.

Rewilding Europe Capital (REC) provides commercial loans to nature-based enterprises across Europe that either want to start operating or scale up their business. The primary geographical focus is on Rewilding Europe's rewilding landscapes, where wildlife populations are recovering thanks to natural comeback and targeted reintroductions. Flexible interest rates and repayment terms are complemented by the expertise of the Rewilding Europe Capital team, meaning the support package on offer is both comprehensive and long-term.

While the investment mandate for Rewilding Europe Capital is diverse, one of the main focus areas is nature-based tourism, which encompasses wildlife watching, nature guiding, accommodation, and local food products. This type of investment shows local communities that wilder nature can provide direct economic benefits, and that more wildlife is not just good news from an ecological perspective, but a commercial one too.  

Examples of such investments include loans made to WeWilder, a sustainable rewilding campus in Romania which provides bison tracking tours and sustainable accommodation, Wildlife Adventures, an Italian company offering guided tours and accommodation in old shepherd's huts; and Wildlife Portugal, a professional nature guide company in Portugal, which offers birdwatching tours and wildlife hide experiences.