The Grass Will be Greener: The Path to Environmentally Sustainable Stadiums
Qatar's claim that its 2022 FIFA World Cup stadiums were carbon neutral brought to the fore the discussion around the efficacy of using carbon-offsetting measures to achieve carbon neutrality. In this commentary, we discuss the credit implications of the environmental sustainability initiatives undertaken by stadium and arena owners/operators to reduce their environmental impact.Key highlights include:
-- We view environmental initiatives at stadiums as positive because they mitigate the environmental risk factors in DBRS Morningstar's environmental, social, and governance (ESG) framework.
-- Debt-funded environmental initiatives could impair financial metrics if there is no near- to medium-term financial payback.
-- Emerging themes in stadiums’ efforts to reduce their carbon footprint include efficient management of energy, waste, and water.
“We believe that, from a credit perspective, facilities that implement initiatives to reduce carbon/greenhouse gas emissions and waste are better positioned to comply with impending carbon-neutrality mandates from their local governments, offer a stronger brand proposition for corporate sponsors, and have better access to capital over the long term. In the short to medium term, however, if arena owners/operators use debt to fund significant capital expenditures to voluntarily meet higher carbon-neutrality thresholds, this could impair their financial credit metrics when there is no immediate financial payback and increase credit risk,” said Gaurav Purohit, Vice President of Sports Finance at DBRS Morningstar.
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