ESG Check-In for Responsible Hospitality

While the concept of responsible business has been around for some time now, it is only since the turn of the century that it has evolved into a benchmark—the environmental, social and governance (ESG) performance—against which companies are being constantly scrutinised for their commitment towards the environment and the people they work with. The tourism industry is no exception.

“Given the direct interactions between tourism industry operators, the environment, and communities the importance of ESG in tourism cannot be overstated,” states the United Nations World Tourism Organisation (UNWTO) in an article titled ESG Framework for Tourism Business. It explains sustainable tourism as making optimal use of environmental resources and conserving natural resources and biodiversity, respecting the socio-cultural authenticity of host communities and ensuring viable, long-term economic operations, including stable employment and contributions to reducing poverty.

The value of ESG reporting for businesses in the tourism sector has been observed in areas like attracting and retaining customers, risk and regulation management, acquiring access to sustainable finance or investor relations management, the UNWTO article says. The ESG metrics relevant for the hospitality industry include climate change mitigation and adaptation; diversity and inclusion, which is measured as the percentage of racial, ethnic and gender diversity at executive and middle level management; waste management and governance, it adds. The Global Hotel Decarbonisation Report 2017 states that the hotel industry will have to reduce its carbon emissions by 66% by 2030 and by 90% by 2050, taking 2010 as the baseline.

With increased awareness about climate change and the need for sustainable living, people are looking for conscious choices, from transportation to accommodation. According to the Sustainable Travel Report 2022 by online travel agency Booking.com, 71% travellers think of travelling sustainably, while traveling choices of 50% are impacted by news about climate change.

Sustainability in Hospitality

Global efforts to make tourism sustainable are reflected in the Glasgow Declaration on Climate Action in Tourism, which aims to achieve substantial pledges for realising the global goal of reducing emissions by half in the next 10 years and achieving net-zero emissions by 2050. The G20 New Delhi Leaders’ Declaration, adopted at the recently concluded G20 summit, underlines the significance of Goa Roadmap for Tourism as a Vehicle for Achieving Sustainable Development Goals. Developed by the UNWTO in coordination with the G20 Tourism Working Group, the Goa roadmap is aimed at promoting sustainable tourism.

“Climate change poses a significant risk on hospitality sector. Changes in weather patterns can negatively impact tourism in certain regions, as extreme heat or drought may make them less attractive to visitors. Furthermore, the industry may also face additional costs to adapt to these changes, such as building sea walls or upgrading air conditioning systems,” says Indian Hotels Company Limited (IHCL) in its Business Responsibility and Sustainability Report (BRSR), included in its Integrated Annual Report 2022–23.

Major hotel chains, like ITC, IHCL, Hyatt and The Lalit, have incorporated sustainable practices in their operations.

Not Without Challenges

In line with the global efforts to integrate sustainability in the hotel industry, the World Travel and Tourism Council (WTTC) has come up with Hotel Sustainability Basics verification scheme that covers three areas: efficiency, planet and people.

Efficiency includes steps to reduce energy and water consumption, waste and carbon emissions; the planet component covers linen reuse programme, green cleaning products, vegetarian alternatives, reduction of plastic use, etc. The people component consists of foundational action to positively affect the community in the place these hotels are in, reduction of inequalities and other community benefits.

The Green Lodging Trends Report 2022 by Greenview, a provider of sustainability programmes and data management for the hospitality and tourism sector, and WTTC, states that there is increasing market and regulatory pressure on hotels to take climate action. It observes that planning and implementation of carbon reduction initiatives is gaining ground, with over 40% of the hotels measuring their carbon footprint. India stands at the fifth position after Taiwan, South Africa, UAE and Spain for “hotels planning and implementing initiatives to reduce carbon emissions”, it states.

Global think tank PWC, in an article titled How to tell hospitality industry stakeholders a compelling ESG story, states that a strong commitment to ESG issues can serve as a “powerful competitive advantage” for hospitality companies.

However, there are challenges in ESG reporting in hospitality companies. Stakeholders have varied needs and expectations, the article states, pointing out that there is a “lack of infrastructure to meet investor-grade reporting”. It faces challenges related to collection of data, analysing and reporting. Since there are different standards and frameworks, ESG reporting may be different from financial reporting, it points out.

Getting Started

The ITC Hotels has instituted the concept of “responsible luxury”, or delivering luxury experiences with planet-positive experiences, says H.C. Vinayaka, vice president, technical, EHS and sustainability. “For over a decade, ITC Hotels has pioneered sustainability initiatives in the hospitality industry. It has surpassed 2030 sectoral emission targets for the hospitality industry, as per COP21 agreement, for the third consecutive year,” he adds.

A total of 12 ITC hotels have received the Zero Carbon certification under Leadership in Energy and Environmental Design (LEED), a commonly used green buildings rating system. Additionally, two ITC hotels have received the world’s first LEED Zero Water certification for hotels.

Approximately, 99% solid waste generated is recycled or reused. More than half of the electricity consumed is generated from renewable sources. Besides mitigating single-use plastic usage, all ITC hotels have onsite organic waste converters. Many properties also have bio-methanation plants which produce biogas from waste to be used in hotel kitchens. ITC Hotels provides employment opportunities to persons with disabilities in diverse functions like housekeeping, teleworking, bakery, etc., as well as trains ex-servicemen and helps them find employment in the hotel industry.

The Lalit New Delhi, a luxury hotel, has electric vehicles (EV) as well as charging infrastructure at its premises to encourage sustainable transportation for its guests. Hyatt Regency Delhi was one of the first in India to come up with an EV charging station at its premises.

The IHCL, which has brands like the Taj and Vivanta, has launched a framework called “Paathya” to achieve sustainability. Gaurav Pokhriyal, executive vice president for human resources at IHCL, says, “IHCL has defined several short- and long-term goals to be fulfilled by 2030 under Paathya. From 100% elimination of single-use plastic across all its hotels to ensuring 100% reuse of wastewater, all hotels of the company will be certified to a global sustainability standard.” It is focusing on achieving 50% energy from renewable sources, he adds. IHCL invests in skill-building training for marginalised youth, he claims.

In its BRSR report, IHCL has recognised sustainable supply chain as an opportunity. “Businesses are under increased pressure from investors, clients, and authorities to lower environmental, social, and governance (ESG) risk exposures in their supply chains,” it states.

At Roseate Hotels and Resorts, a chain of luxury hotels, wastewater is recycled, plastic use is avoided and LED bulbs are used for energy efficiency. The Roseate House New Delhi also got the gold rating LEED India Gold rating for its efforts towards sustainability.

“The environment is at the forefront of everything we do. We grow our own green salad leaves using the hydroponic farming method,” says Kush Kapoor, CEO, Roseate Hotels and Resorts. Roseate hotels use solar energy for heating water and 80% of their lighting fixtures are energy-conserving LED. “We are converting our fleet of vehicles to hybrid to reduce our dependence on fossil fuels. Our goal is to be paperless in most of our key departments and to introduce an e-ordering and billing system,” Kapoor adds.

The ESG Solution

While the challenges in ESG compliance cannot be ignored, nor can the advantages. “ESG compliance is not a destination but a roadmap for every organisation that is committed towards sustainability. There are challenges on this path but nothing that cannot be overcome with diligent planning and commitment,” says Kapoor of Roseate Hotels.

Sustainable business practices can no longer be treated as a matter of choice if Indian hospitality service providers want to stay relevant in the global market. They must either shape up or ship out.