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Environmental, social, and governance (ESG) priorities are already driving investment decisions with brown discounts and green premiums expected to become a decisive factor in the valuation of assets by the end of this decade.
In the hotel and hospitality industry, ESG can be applied in a number of ways, such as:
Hotels and hospitality companies can implement practices to reduce their impact on the environment, such as using energy-efficient appliances, conserving water, and reducing waste. They can also consider the environmental impact of their supply chain and work with suppliers who adopt sustainable practices.
Hotels and hospitality companies can focus on being good neighbors and responsible corporate citizens by supporting local communities and promoting diversity and inclusion. They can also prioritize the well-being and safety of their employees and customers.
Hotels and hospitality companies can prioritize good governance practices, such as transparent communication, ethical behavior, and effective risk management. They can also consider the governance practices of their suppliers and partners.
By integrating ESG considerations into their operations, hotels and hospitality companies can demonstrate a commitment to sustainability and responsible business practices, which can be attractive to customers and investors who prioritize these values.
There are several environmental, social, and governance (ESG) standards that are applicable to the hospitality industry. These standards provide guidance on how organizations in the industry can operate in a responsible and sustainable manner.
Some examples of ESG standards that are applicable to the hospitality industry include:
The GRI Standards are a global framework for sustainability reporting that provide guidance on how organizations can report on their environmental, social, and governance impacts.
This international standard provides guidance on how organizations can operate in a socially responsible manner, including how to respect human rights, promote fair labor practices, and protect the environment.
Green Globe is a global sustainability certification program for the travel and tourism industry, providing a framework for hotels and other tourism businesses to measure and improve their sustainability performance.
The Leadership in Energy and Environmental Design (LEED) certification program is a globally recognized green building rating system that provides a framework for designing, building, and operating sustainable buildings, including hotels and other hospitality facilities.
To earn LEED certification, a building is awarded points for satisfying certain green requirements in six categories
The number of points the building has earned then categorizes it as one of the following-Certified, Silver, Gold, or Platinum. In addition to selling more room nights at potentially higher rates, LEED-certified buildings typically save 30-50 percent in energy usage, 35 percent in carbon emissions, 40 percent in water emissions, and 70 percent in solid waste.
The Luxury Eco Certification Standard (LEEDS) is a sustainability certification program specifically designed for luxury hotels, providing a framework for measuring and improving sustainability performance in the luxury hotel sector.
By adhering to these and other ESG standards, hotels and other organizations in the hospitality industry can demonstrate their commitment to sustainability and social responsibility, and help to create a more sustainable future for the industry.
Chief Financial Officer (CFO) plays an important role to set and achieve sustainability goals in the hotel industry.
Developing and implementing financial strategies that support the hotel’s sustainability goals. This might involve identifying opportunities for cost savings through energy-efficient initiatives, investing in sustainable technologies, or implementing policies and procedures that reduce waste and improve resource efficiency.
Tracking and measuring the financial impacts of sustainability initiatives. Tracks the financial performance of sustainability initiatives, including the costs and benefits of such initiatives. It helps the hotel make informed decisions about which initiatives to pursue and how to allocate resources.
Communicating the financial benefits of sustainability initiatives to key stakeholders. Communicates the financial benefits of sustainability initiatives to key stakeholders, including investors, shareholders, and employees. It helps to build support for these initiatives and encourage their adoption.
Participating in sustainability-related decision-making. Plays a key role in the decision-making process regarding sustainability initiatives, helping to ensure that such initiatives are financially feasible. It aligns with the overall goals and objectives of the organization.
Establishing budgeting and forecasting systems to support sustainability initiatives. Works with the hotel management team to set up budgeting and forecasting systems. Takes into account the costs and benefits of sustainability initiatives. Helps to ensure that these initiatives are financially feasible and sustainable over the long term.
Tracking and monitoring the performance of sustainability initiatives. Can be responsible for monitoring the performance of sustainability initiatives to ensure that they are meeting the expected financial targets. Also tracks the contributions to the overall sustainability goals of the hotel.
Works with other departments to integrate sustainability considerations into financial planning and decision-making. These include operations, marketing, and human resources. The CFO ensures that sustainability considerations are integrated into financial planning and decision-making across the organization.
Develops and maintains relationships with suppliers and partners who support sustainability goals. Encourages the procurement team to who can solicit products and services that are environmentally friendly and socially responsible from partners.
Overall, as the CxO of a hotel, you would play a key role in promoting sustainability by evaluating and implementing financial strategies that support the hotel’s sustainability goals, tracking and measuring the financial impacts of these initiatives, and communicating the results to key stakeholders.
Grep Digital has helped develop applications in facilities, and real estate space across several industries. Connect with us to partner in your sustainability journey.
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