Environment, Social, and Governance Adoption in the Hotel Industry
- Feb 6, 2025
- 7 min read
Updated: Mar 9, 2025
Alexander is a Senior lecturer and Academic Subject Lead in hospitality, events & Tourism and a Business Consultant focusing on new products and new concept development.
A Global Status Update from the CBRE outlines how increasing employee and customer engagement is driving the hotel industry to implement sustainability at both an individual property level and across the hotel groups. According to the report, the focus of these initiatives is based on four core areas, including energy efficiency, carbon emission, water conservation, and water reduction, which is a key part of any ESG program (CBRE, 2023). For example, figure 1.0 shows energy per occupied room, with the UK ranking well at both the European and global levels.
Figure 1.0 shows energy per occupied room.
Furthermore, the report outlines the main green building certifications and standard agencies across the globe, as outlined in Figure 2.0. In the UK, we have seen the implementation and updating of various legislation, such as:
The Waste Controls (England and Wales) Regulation 2011: Requires registering for carrying of waste
Environmental damage (Prevention and Remediation) Regulations 2009: Hotels must report any damage to land or the environment
BREEAM 2023 (Building Research Establishment Environmental Assessment Method
ISO 14021:5.7: International Standard specifies requirements for self-declared environmental claims, including statements, symbols, and graphics, regarding products
Figure 2.0 Green building certifications and standard agencies across the globe
The report also expects that further to the legislation, mandatory disclosure requirements and high energy prices will further incentivise property owners to adapt green energy efficient initiatives at a property level and to avoid possible penalties for non-disclosure requirements. This is also vital to ensure a transparent approach is taken to ESG reports and the avoidance of greenwashing and inaccurate reporting of activities. It is also stated that hotel owners are aware of the possible financial savings of sustainable initiatives and the impact of non-action on brand reputation (CBRE,2023). For example, a recent policy document by Melia Hotels on Climate Change and Environmental Policy outlined a series of initiatives at a group level overseen by the Board of Directors and its Sustainable Committee.
For example, at one property in the Melia group, they have initiated several programs, including the recruitment of disabled staff, changing their supply chain to focus on local farmers, a paperless program, a reduction in plastic initiatives, and a beach cleaning and coral plantation program (Melia Hotels, 2022). A further element that has been outlined by the report is the effect of climate change on the local environment in terms of flooding, water drought, water stress and increased temperatures. These factors are now significant considerations for hotel operators when addressing their sustainable initiatives at a property level.
The report concludes that there will be a slowing in short-term progress due to a mix of industry and global economic challenges, but stakeholders need to focus on trends and environmental initiatives and have oversight of their ESG policy. This, combined with developing the right internal resources to tackle these challenges, needs to be a strategic priority (CBRE,2023).
Hotels with targets
Furthermore, the World Travel Tourism and Council's recent report on Nature Positive Travel and Tourism 2024 set out the key role that Travel and Tourism have in the protection of and conservation of nature with examples from the industry of positive actions. The authors outline several recommendations in terms of awareness and actions that need to take place. The report highlights that a global review conducted by the UN Tourism 2023 shows that the importance of nature to Tourism is universally acknowledged within national policies, and nature is a primary tourism product and a direct link to the hospitality industry. In a UK context, The Tourism Recovery Plan, published in June 2021, outlined ambitious plans for a sustainable tourism plan that aims to put the UK at the forefront of the tourism sustainability agenda.
The report cites several previous WTTC surveys, as seen in Figure 4.0, that found over 65% of respondents of the study had set specific carbon targets, 40% had water stewardship initiatives, and 39% had waste reduction and single-use plastics initiatives; however, only 10% of respondents had initiatives related to biodiversity (WTTC,2024).
Figure 3.0 Respondent results hotel with targets WTTC Report 2024
That last figure is a reminder of the continued actions that need to happen; however, the report points out that some great positive actions have emerged from giving guest opportunities to visit various biodiversity projects in their local regions, more awareness of biodiversity issues, and support or donations to local biodiversity projects. The greening of components of a supply chain has been identified as one of the key ways to improve sustainability in a business. We have some excellent examples of this recent positive nature action from a UK context with the opening of the 1 Hotel Mayfair part of SH Hotels & Resorts. The building design focuses on using local materials from the UK, a CO2 offsetting program through 400 square meters of green walls, water stewardship, and the use of sustainable linen.
Kempinski’s Hotels and Resorts 2021 ESG reports outlined a range of initiatives that it had introduced, such as the introduction of wooden key cards and the removal of single-use plastic, resulting in a total of 3,452,070 single pieces of plastic being removed from use (Kempinski, 2022). This theme of alternative materials has further developed, and we have seen how biophilic design has become a key element of architecture. As Kelbert (2008) explains, biophilic design is an attempt to satisfy the need for contact with natural systems and processes in the contemporary built environment and to improve people's physical and mental health, productivity, and well-being. This element of introducing sustainability into the buildings is highlighted and has become more widespread. Biophilic design is used both inside and out, with the use of local and regional plants, reclaimed wood, and sustainable timbers.
Challenges facing hospitality and tourism businesses
The report also outlines, based on their surveys, the challenges that businesses face in achieving their nature-positive goals. From Figure 5.0, we can see the biggest change from 2022 to 2023 from respondents of the WTTC surveys has been the lack of funding to invest in sustainability, biodiversity, green technology, and supply chains. In the UK, several funding schemes and grants have been made available for tourism, travel, and hospitality organisations that intend to adopt greener actions. This can vary from small-scale tourism infrastructure grants, grants for electric vehicle charging points, and various funding grants from the UK Shared Prosperity Fund.
Figure 4.0 Barriers to Action for Nature 2022 & 2023 WTTC Report 2024
There is a rise in interest and demand for Sustainable tourism sites citing a study from bookings.com that over 81% of customers last year intended to stay in sustainable accommodation, and up to 50% of customers did not mind paying more for a sustainable option (Booking.com, 2022). This shows that sustainable trends are vitally important not only in protecting local nature and biodiversity but also in being a sustainable business option.
Findings
As consumers and businesses strive to do more to address key societal and environmental issues, companies need to ensure a diverse ESG team is created that represents all areas of the industry, its employees, and the communities it serves. A coordinated approach to governance structure is, therefore, vital to ensure effective accountability for decision-making. As Stanley (2024) outlines, there has been a significant increase in awareness and consideration of ESG and governance amongst investors, with 17% of investors planning to increase their ESG investments (British Business Bank, 2024). Effective ESG can also have a positive impact on value creation in several ways for a company. As outlined by Heinz et al. (2019), it can improve top-line revenue growth in both business-to-business and business-to-consumer segments; it can lead to effective cost reductions, improve productivity, enhance investment returns by focusing on long-term strategic investments, and generate additional revenue through subsidies and supports from local authorities and governments.
Moreover, key metric needs to be adopted to measure performance of the ESG goals outlined based on key established frameworks reflecting the current business operations and its code of conducts. The need to have a robust framework in accordance with the Global Reporting Initiative Standards is vital to ensure relevant data is collected, analysed, and shared, ensuring that greenwashing does not happen and an organization can communicate its objectives with credibility (GRI,2024). ESG performance must be expressed in an effective manner both to showcase initiatives and to address areas of underperformance and focus points.
One of the key influencers for the need to invest and implement a robust ESG framework in an organization is consumers, with over 70% of consumers stating they would be willing to pay 5% more for a green product or service (Heinz et al., 2019). Research has also shown that a considerable amount of businesses have adopted a growth strategy in the green market segment, articulating a value-shared approach.
Read more from Alexander Muir
Alexander Muir, Senior Lecturer & Business Consultant
Alexander is a Senior Lecturer & Academic Subject Lead in Hospitality, Events and Tourism and a Subject Matter expert in Hospitality for leading universities in the United Kingdom and Ireland. Alexander also works as a business coach and consultant for charitable organisations and his family-owned food manufacturing business, The Clare Jam Company Ltd.
He has extensive operational management experience at some of the leading hospitality management companies, such as Dorchester Collection, Four Seasons Hotels & Resorts, Rosewood Hotels and Sketch London.
References:
British Business Bank (2024). What is ESG? A guide for businesses | British Business Bank. [online] www.british-business-bank.co.uk. Available at: https://www.british-business-bank.co.uk/business-guidance/guidance-articles/sustainability/what-is-esg-a-guide-for-smaller-businesses.
Booking.com (2022). Climate, Community and Choice: Booking.com Reveals Trends Shaping Sustainable Travel in 2022. Available at: https://news.booking.com/en/climate- community-and-choice-bookingcom-reveals-the-trends-shaping-sustainable-travel- in-2022/ (Accessed 1st May, 2024)
GRI (2024). GRI Standards. [online] Global Reporting. Available at: https://www.globalreporting.org/standards/.
Henisz, W., Koller, T. and Nuttall, R. (2019). Five ways that ESG creates value . [online] Mckinsey. McKinsey Quarterly. Available at: https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/Strategy%20and%20Corporate%20Finance/Our%20Insights/Five%20ways%20that%20ESG%20creates%20value/Five-ways-that-ESG-creates-value.ashx.
Kempinski Hotels (2022). Envionmntal, Social & Governance Report/ Kempinski Hotels. Available online at: https://www.kempinski.com/en/sustainability/esg-report (Accessed 20th April 2024)
WTTC (2024). Nature Positive Travel and Tourism. Available at: https://wttc.org/initiatives/vision-for-nature-positive-travel-and-tourism (Accessed 2nd May 2024)
Meliá Hotels International (2024). - Meliá’s official corporate website. [online] Available at: https://www.meliahotelsinternational.com/en.
