EXCLUSIVE: New research from the Energy and Environment Alliance (EEA) and King’s Business School shows multiple issues affecting implementation of ESG leadership across the sector, including a lack of clarity on the definition.
The global research, ESG Leadership in the Global Hospitality Industry: Global Leaders’ ESG Mindprint, involved more than 250 hospitality leaders, who took part in workshops and interviews last year.
The research has been used to inform the development of an ESG Executive Education Hospitality course for the industry’s C-suite, run by the EEA and King’s Business School.
The launch of the course last year coincided with the introduction of new IFRS Sustainability Disclosure Standards and CSRD, which has caused a shift in international financial regulation to make ESG reporting mandatory.
Hospitality leaders involved in the research reported concerns around the proliferation of different reporting standards, other stakeholders’ scepticism and lack of engagement with ESG, concerns over the reaction of guests, as well as a lack of skills and knowledge both within the industry and among potential advisors when it comes to implementation.
Dr Marc Lepere, head of ESG & sustainability for executive education, King’s Business School said, in the introduction of the 16-page report, that “business leaders will need to set new strategies, nurture new cultures, up-skill their workforce and step-up adoption of new technologies to future-proof investments.”
To baseline hospitality leaders’ current thinking on ESG, King’s ESG Anthropology tool was used during the collection of responses.
The tool is designed to capture “top-of-mind” associations of ESG, non-verbal perceptions (e.g., images or music), and projections of ESG as a social event.
The results from the tool showed global hospitality leaders have multiple impressions of what ESG and sustainability actually are, and what they mean.
Even now there is something of a misunderstanding and scepticism around ESG in the sector with the report finding: “ESG is primarily found to mean regulation and management. These findings translate to something of a split personality whereby ESG is perceived to be both highly impactful – in terms of compliance risk – and a management pretence (greenwashing).”
King’s Business School’s Lepere, said: “The common theme of our research was the desire to cut through confusion and contradiction and develop an approach to ESG that works for the sector.”
Many leaders involved in the research were also concerned at the quality of ESG advice available. “It’s sometimes difficult to find the right advisors who are knowledgeable and able to help companies think holistically, as opposed to focusing on a certain subject or on certifications or labels,” said one participant.
Another said: “It’s hard to know what to do in every single city, every single state, every single country. The regulation can get more and more standardised in the next few years, but there’s always a difference”.
Other barriers to action highlighted in the study included budget and understanding the cost of implementation over the short, medium and long term, and the difficulty in aligning owners and operators.
“The operating business is separate from the actual physical real estate. The owners can’t direct the employees at the management companies. Choosing operators and brands that are culturally aligned with us is the best way we can affect change”, was one response.
There was also a concern that the sector was focused mainly on the E in ESG, emphasising practices around GHG, when there is actually a desire to focus on the S – the social impact.
When asked about what they would like the ESG course to focus on, 73 per cent of leaders identified reporting and benchmarking as top priorities.
One respondent said: “It’s hard to measure and compare performance and assess value. This makes it complicated to align key stakeholders and to convince others with an appropriate calculation on payback”.
Six themes identified as key concerns for leaders in the industry:
- Data collecting and benchmarking – start now, collect and leverage data to inform your ESG pathway;
- Collaborate and partner – connect with those that know. Learn, adapt and incorporate the concepts that apply to your business and sector;
- Why throw away value? Unpack E-S-G. The elements are interdependent and require a bespoke approach to each pillar;
- Opportunities abound. Two key drivers that offer vast opportunities for hospitality are the Built Environment and Health/Wellbeing;
- No judgement. Getting to a “Net Good”. “Learn and Unlearn together.”;
- Leadership. Four Factors to consider a) Intention b) Ambition c) Decision Making d) Honesty (truthful). Source and use evolving data as the basis of your actions.
Ufi Ibrahim, chief executive of the Energy and Environment Alliance said: “Leaders in the sector are well aware of the urgency of ESG questions and are clear that a common approach to tackling and reporting on ESG issues will be a major driver of change.
“Building a rigorous understanding of the issues and potential solutions across the industry is a critical part of that change process.”
Lepere added: “We are delighted to be working with the EEA on a programme that starts with education and will ultimately result in better-informed and more focused conversation and collaboration within the sector and with regulators.”
The ESG executive leadership course is now open to its second cohort of participants.
King’s ESG Anthropology tool will be deployed before and after each course, and annually at the EEA Global Summit to track shifts in how leaders’ understanding of ESG is developing over time across the hospitality industry worldwide.
You can read more about CSRD and ESG reporting, as well as find a link to a discussion about the course, below.
To obtain a copy of the report contact David Tarsh by emailing [email protected]
CSRD regulations: What hotels need to do about ESG reporting?
Photo by Zach Lucero on Unsplash