LVMH and SWIREPROPERTIES have joined forces

Authors | Chai Xuchen, Wang Lianqi

One is a globally renowned luxury giant, and the other is a highly regarded luxury mall operator. LVMH and SWIRE have come together in perfect harmony.

On November 6th, at the 7th China International Import Expo, LVMH Group and SWIRE Properties announced the establishment of a strategic partnership to jointly promote sustainable development.

As tenants and owners of shopping malls and office buildings, the collaboration between the two parties can be seen as a natural progression.

It is understood that this cooperation mainly covers brands under the LVMH Group, including the upgrading and renovation of new and old stores and offices in six cities in mainland China and Hong Kong, with a total existing area of approximately 50,000 square meters.

According to the agreement, brands under the LVMH Group will participate in three tenant-exclusive sustainable development programs from SWIRE Properties: the "Environmental Performance Charter" for office tenants, the "Green Retail Partnership" for retail tenants, and the "Green Kitchen" program tailored for dining merchants. The cooperation will cover all stages of the leasing cycle, from renovation to operation, focusing on energy conservation, emission reduction, water saving, and waste reduction.

Notably, the LVMH Group will become the launch partner of SWIRE Properties' newly introduced "Green Retail Partnership," focusing on enhancing the sustainable performance of retail stores. The two parties will also introduce a "Sustainable Renovation Guidelines" framework to establish clear design standards for new stores opened by the LVMH Group.

From the content of the cooperation, it appears that SWIRE is the more proactive and leading party. SWIRE Properties is ahead of its peers in the real estate industry's sustainable development. In 2023, SWIRE Properties ranked second globally in the Dow Jones Sustainability Index for the real estate management and development industry and has topped the Hang Seng Corporate Sustainability Index for the seventh consecutive year in 2024.

The pursuit of enterprises must resonate with the times. In the era of new energy, ESG (Environmental, Social, and Governance) is a way for companies to participate in sustainable development, which has also become an important consideration factor for capital markets regarding companies. Currently, industry giants are increasingly viewing ESG reports as the "second financial report" of enterprises, as it relates to their gains and losses in the capital market.

In recent years, the US and Hong Kong stock markets have incorporated ESG into their investment frameworks, and public funds are actively laying out ESG strategies. CITIC Securities has pointed out that integrating ESG into equity investment has become a trend, deeply coupling with the entire process of "fundraising, investment, management, and exit."

In the fundraising phase, the ESG investment system can broaden funding channels; in the investment phase, ESG provides a new perspective for understanding corporate opportunities and risks; in the post-investment phase, improving corporate ESG governance can assist in high-quality development; in the exit phase, companies with good ESG performance are more aligned with the requirements of listing supervision MSCI (Morgan Stanley Capital International) also stated that ESG ratings provide a window for understanding the financial performance risks of enterprises.

As giants in the luxury goods and real estate industries, LVMH and SWIREPROPERTIES aim to further advance in financing and scaling, and actively shouldering responsibilities in environmental, social, and governance aspects has become a necessary task.

Currently, the LVMH Group has set a goal to halve its carbon emissions related to global business and energy consumption (with 2019 as the baseline) by 2026; SWIREPROPERTIES plans to reduce the carbon intensity of tenant operations by 28% per square meter by 2030.

LVMH and SWIREPROPERTIES also represent the pursuit of sustainable development by industry giants, and companies with such pursuits and investments will receive more positive feedback and returns in the future