THE FLAG: ESG and growth are not contradictory

The family-owned company, THE FLAG, aims to continue robust growth in the real estate sector in 2024, while also considering sustainability aspects. This was communicated by the company during the presentation of its latest ESG report.

"Contrary to market trends, we were able to sustain growth in 2022 and 2023 while adhering to our ESG goals," said Dr. Eike Muhr, Managing Director of THE FLAG. Despite restrictions for hospitality businesses due to the COVID-19 pandemic and disruptions in supply chains and high energy prices caused by the war in Ukraine, Muhr stated that THE FLAG managed well through this challenging period. The properties remained open throughout, and employees were retained. The tailored concept of hospitality services for people in different life stages (Senior Living, Student Apartments, Young Professionals, and Business Living) proved successful.

Affording ESG Commitment

"Today, the real estate industry faces economic uncertainties, tempting some market participants to cut corners on sustainability," Muhr stated. Particularly for profit-maximizing companies, some real estate firms may no longer afford good ESG practices. Muhr emphasized the need for persistence and willingness to implement measures regarding environmental, governance, and social aspects. "Our long-term perspective as a family-owned company pays off because we aim to create values for generations," Muhr added.

Building Purchase for Repurposing

At THE FLAG, project development increasingly focuses on revitalizing properties. By optimizing existing buildings technically, digitally, and energetically, while also incorporating sustainable designs, multiple benefits arise. Valuable space is conserved, acquisition and repurposing of existing buildings can be more cost-effective, and the investment pays off quicker. Furthermore, renovated properties emit fewer CO2 emissions, benefiting the environment, easing costs, and often expediting approval processes, such as the office building in Wiesbaden currently being transformed by THE FLAG for the Senior Living segment. Through renovation, energy consumption is expected to decrease by around 70%, from the previous 227 kWh per square meter to approximately 70 kWh per square meter.

Achieving ESG Goals through a Bundle of Measures

For THE FLAG, achieving success in ESG isn't reliant on one or two measures but involves a comprehensive bundle of actions. Apart from building revitalization, the company focuses on electromobility, car and bike sharing, combined heat and power plants, heat pumps, photovoltaic systems, employee competitions, support for social employee engagement, educational opportunities, guidance like the Code of Conduct, and much more. "Even small things like aerators that minimize water flow pay off. In our properties, we now consume about 75% less water, amounting to approximately 1.2 million liters saved per year," Muhr highlighted. Through digitization, the company saves around 1.3 tons of paper, and solely through digitized forms, 130,000 pages of paper are eliminated. Intelligent and energy-efficient lighting helps save 493,500 kWh per year, equivalent to the annual power consumption of about 120 four-person households.

Continued Growth for THE FLAG

Over the past 12 months, THE FLAG experienced significant growth: completing new properties this year led to nearly doubling the number of employees to 170 individuals. The projected personnel growth for 2024 is around 7%, more moderate than the previous year. The company also witnessed a considerable increase in the number of operated properties, rising from 11 in 2022 to 14 in the current year, with an additional five projects in development. Consequently, the portfolio's total area expanded from around 53,500 sqm to over 65,000 sqm.

The 2023 ESG report can be downloaded here