ESG in the hospitality industry is a big topic—and it’s one that is constantly evolving. “Environmental, social and governance is a framework used to assess an organization’s business practices and performance on various sustainability and societal issues,” said Catherine Dolton, chief sustainability officer, IHG Hotels & Resorts. “It also provides a way to measure business risks and opportunities in those areas.”
Environmental
The “E” in ESG is often in the spotlight, as more and more commercial real estate owners and investors turn their attention to sustainability initiatives, especially as new regulations are implemented and enforced. According to “The state of commercial real estate property management for 2024” report from Building Engines, a JLL company, ESG reporting is a top priority for the CRE industry—so much so that the researchers saw a 42-percent year-over-year increase in prioritization of ESG reporting.
Commercial real estate has a huge part to play in helping the environment. According to JLL’s “Decarbonizing cities and real estate” research report, buildings account for 40 percent of global carbon emissions. In building-dense business centers, this proportion is considerably higher, the report shows.
“Practical approaches to achieving publicly stated carbon reduction goals must include real estate and infrastructure like renewables and transportation. This will require new forms of collaboration. These investments will result in a significant long-term return on sustainability,” Gregory Bolino, global head of sustainability strategy and assets, JLL, said in the company’s “Rethink doing sustainability alone” report.
IHG’s Dolton said that the Environmental pillar of ESG is important not just for the sake of the environment, but also for the health of people and the economy. “People need clean air and water to thrive, and our economy is fundamentally rooted in natural resources extracted from the environment,” she said. “For these reasons, it is essential for companies like IHG, who care for their employees and the communities where they operate, to be good stewards of the environmental resources they depend on.”
Additionally, she said that natural resources, energy and water can also comprise a significant portion of businesses costs, “so being a good steward of the environment also simply makes good business sense.”
Social
While sustainability is a top talk topic for the industry right now, the social aspect of ESG is just as important. “Businesses depend on people, employees, customers, guests, and the communities where they operate,” Dolton said.
And the social aspect goes hand in hand with the environmental one. For instance, Beyond Green, a subsidiary of Preferred Travel Group, was launched in April 2021 to represent hotels that demonstrate sustainability leadership across three pillars: Nature, Culture and Community.
“The result is a portfolio of iconic hotels, resorts and lodges that work tirelessly to protect biodiversity, celebrate culture heritage and improve local people’s livelihoods in destinations around the world, all while delivering an exceptional guest experience,” Lindsey Ueberroth, CEO of Preferred Travel Group and Beyond Green, wrote in Beyond Green’s December 2023 “Global impact report.”
Members are certainly giving back. Beyond Green members have donated more than $3 million to further the cause, with a majority of that money serving community and culture initiatives.
Diversity, equity and inclusion is a big factor in the “S” of ESG. At IHG, DE&I “sits at the heart of IHG’s purpose to provide True Hospitality for Good to our guests, hotels, owners, colleagues and communities,” Dolton said. “Our Global Diversity, Equity & Inclusion Board, chaired by IHG CEO Elie Maalouf, features representatives from across our company who offer a breadth of experience from different cultures, industries and organizations. They hold a collective passion for the diversity, equality and inclusion agenda and work with our regional councils, stakeholders and our dedicated DEI team to ensure we continue to honor our commitments and strive for best practice.”
Governance
Finally, governance rounds out the acronym. And for large organizations, this must start at the top. At IHG, for example, a clear part of the board’s agenda is to ensure the highest ethical standards of governance are maintained to support its culture, values and commitment to conducting business responsibly. Dolton said that the company’s CEO, executive committee and senior leaders make sure governance is embedded, measured and upheld on a daily basis, adapting policies and initiatives if necessary to ensure continued alignment of strategy and culture.
In 2022, IHG made progress in a several areas, including increasing the diversity of senior leadership in the U.S. and U.K. and celebrating 90 graduations from its Rise program, which focuses on increasing the number of women in GM and other senior positions in the company’s managed hotels. In communities, progress includes supporting charities providing aid to people in need following natural disasters and the war in Ukraine. Time also has been spent mapping how the company reaches and measures its commitment to improve the lives of 30 million people by 2030.
“Ultimately, our ability to match words with robust plans and actions is what counts,” Dolton said.