What are the six key sustainability focus areas for hospitality SMEs?

Stakeholders increasingly expect and demand attention from hospitality companies. The challenges of operating properties through the pandemic in an uncertain environment continue to be felt by hospitality companies. Furthermore, other rising issues such as the talent market, labour conditions, supply chain disruption, climate instability, and regulatory frameworks make these times difficult to navigate.

COVID-19 has contributed to the transformation of the business landscape in many aspects.  Examples are the business’s digitization process and sustainability implementation, which otherwise would have taken years to change. Nonetheless, we are still far from being regenerative practices as standard in the Hospitality industry.

It is imperative to stay away from old, careless, and irresponsible practices. What we reflect on is how do we decouple growth from negative impacts in the hospitality industry?

The three topics that have gained momentum over the past three years are:

1. Environmental Social and Governance (ESG) criteria for SMEs matters are increasingly viewed as resilience in the face of crises and businesses’ ability to create shared value over the long term. Hospitality businesses should expect further environmental and social regulations, and investors and banks will require more information about the company ESG data. 

2. Sustainable Development Goals Agenda 2030 

Although the 169 targets of the Sustainable Development Goals Agenda for 2030 were designed for countries and not for small businesses, companies can align their practices with the United Nations Agenda and access the tool to measure their impact and find inspiration, resources, and best practices. https://www.unglobalcompact.org/take-action/sdg-action-manager

3. Decarbonization 

The hospitality industry has the challenge to decarbonize operations and achieve net-zero. Many initiatives and methodologies have been shared in the past months. 

Often, hospitality directors and hotel managers are guided, when choosing sustainable practices, by their direct impact on the operations in their constant search for efficiency. Some brands would implement environmental programs and initiatives only if the competitors have done so or intend to do so.

Companies tend to respond more to stakeholder demands than to social problems. Under this perspective, it is not hard to understand why smaller hotel companies’ primary motives to establish environmental practices involve cost reduction and efficiency, as this is the owners’ expectation.

Thus, it is crucial to have processes, controls, and well-informed management teams to guide the business focus and strategy.

The six key areas of focus are:

  1. Have strategic plans and an internal director responsible for the sustainability and purpose journey.
  2. Provide educational programs for the entry-level and management teams.
  3. Evaluate sustainability-related risks and opportunities. 
  4. Internal and external stakeholder engagement. Instead of being limited to a sustainability matrix or a handful of stakeholders, having a wider group of affected groups, identifying what concerns them and the business materiality around it. 
  5. Prioritize culture and mental health. 
  6. Implement technology for efficiency, transparency, and engagement.

Start with the following actions;

Action 1. Strategic plans 

Action 2. Educational programs

Action 3. Evaluate sustainability-related risks and opportunities

Action 4. Internal and external stakeholder engagement

Action 5. Culture and mental health

Action 6. Implement technology 

Action 1. 

I. Strategic Plans Understand how mid-management teams integrate stakeholders’ considerations and concerns into strategy and business decisions. 

II. Set policies and internal standards regarding social and environmental sustainability.  Think beyond environmental and cost-effective practices, and see sustainability holistically. Embedded in every department what sustainability and purpose-driven business means for the hospitality and hotel sector.

III. Stay informed of new developments, in regulation and reporting, especially related to disclosures and investors relations reporting.  Companies that do not transform their operation to become more sustainable, including practices that do not translate into immediate business opportunities, may face a competitive disadvantage in the near future.   Regulation is a driver of sustainability strategies and reporting for listed companies. However, new frameworks such as the CSRD directive will include mandatory reporting for SMEs about non-financial information. Related to climate mitigation and human capital management, amongst other governance topics.  This research uncovered the significance of stakeholders and policymakers to open a dialogue and produce norms that could be applicable for small and family businesses.

Action 2. Educational programs & Action 5. Prioritize culture and mental health 

IV. Rethink labour relations. Shifts, wages, and workforce opportunities to grow and learn. Encourage employees to contribute, innovate and suggest solutions to sustainability management practice. Provide them with training in the areas of environmental and social considerations and awareness. 

Photo by Jason Goodman on Unsplash

V. Diversity, Equity, and Inclusion (DEI)

According to the International Labour Organisation (ILO) and Women on boards, only 19% of board seats globally are occupied by women. Less than 5% of the CEOs of the world’s largest corporations are women, and only 13% of companies have gender-balanced boards of between 40% and 60 % women. 

In hospitality, the industry has a highly gendered ratio,  and career advancement depends on complying with the gendered characteristics of the workplace (Calinaud, Kokkranikal, and Gebbels, 2021).  Industry-specific facts such as internal barriers, glass ceiling, gender bias, lack of position flexibility,  job structures, the absence of networking and mentoring opportunities keep women from progressing to director roles and board member positions. 

These results are consistent with previous studies that have found that greater gender diversity on boards has a positive influence on CSR.  When discussing inclusion, the misrepresentation of diverse teams (including race, gender, sexual orientation, socioeconomic status, and disability) at management and board levels is an issue. It is important to mention intersectionality because it is a theoretical framework for understanding how multiple social identities such as race, gender, sexual orientation, socioeconomic status, and disability intersect at the micro-level of individual experience to reflect interlocking systems of privilege and oppression (i.e., racism, sexism, heterosexism, classism) at the macro social-structural level.  I created a guide to get started together with the Raizup team, you can read it here. 

Action 4. Internal and external stakeholder engagement

VI. Stakeholders. Business leaders engage with key stakeholders, listen and develop enduring relationships. Management teams have to identify in what areas the organization needs support in implementing social and environmental programs and initiatives.

VII. Guests. Consumers are more conscious of sustainability when making accommodation and travel choices. Effective communication is as essential as implementing social and environmental sustainability strategies. For upscale hospitality brands, this research paper shows consumers’ willingness to pay more (WTPM) in luxury hospitality when companies are value-driven or more conscious of their operations. It shows how hotel managers can implement strategies to retain more responsible consumers to improve sustainability practices.

Guests would like to be informed about the initiatives developed by the hotel; however, only thirteen people read or paid attention to the signs or the brochures regarding sustainability available inside the guestroom during their stay. Thus, the communication forms need to be more attractive, different without being intrusive, and it needs to fit the concept of the hotel.

Action 6. Implement technology for efficiency, transparency, and engagement

VIII. Climate resilience and crisis management. Embrace governance structures and practices to support employees. Technology implementation is also fundamental to prevent and prepare teams for scenarios and planning. No matter when technology is needed, strong management leadership is also required, and the bigger organizational knowledge capabilities, the bigger reward obtained. The integrated view derived from the research carried out is that knowledge increases when framed in a convincing strategy that can support direct and indirect improvements.

 A need for regeneration 

Regenerative practices go beyond having a certification or doing “less bad”. Environmental and social practices in hospitality are a game-changer because it transforms businesses operations at their core. Examples of positive impacts on local communities and ecosystems are decarbonisation operations and focus on biodiversity restoration. 

“What can be achieved when living systems principles are subtly embedded in the way in which a diverse group comes together to work holistically on future vision and strategy”.

Jenny Andersson 

The travel and tourism industry has an opportunity to reverse the current situation, protect natural heritage and community wellbeing, and ensure the sustainable economic and social development of destinations.

 Decade on Ecosystem Restoration 2021-2030. 

“The main challenge is the lack of human imagination; our inability to see a different future because we’re staring down this dystopian path of the pandemic, climate change, biodiversity loss. But the collective awareness that we are in this together is a huge opportunity.” – Tim Christophersen, head of Nature for Climate branch at the UN Environment Programme.

Here are some recommendations we propose to get started on regenerative destinations. 

Photo by Shifaaz shamoon on Unsplash

Conclusion 

We need commitment from top-down, involving all the employees on the sustainability journey, gathering and measuring data. 

  • Analyze the business social and environmental impacts, starting with a review of the supply chain and supplier risks. 
  • What data do we need to understand the organization’s social and environmental impacts? What is not currently being reported or measured that society will hold the business accountable for? 
  • What metrics are the business KPIs and management systems taking into account?

“Micro-sized enterprises (MEs) are many in number in the EU and are considered as vital and important actors in the push towards sustainable development. MEs perception and attitude towards sustainability dictates the outcome in the future”. 

In addition, having a champion leader helps embed strategies in every department. 

  • Does the leadership have the freedom and incentives to do their work with purpose? 
  • What is the business doing to foster the internal culture? What educational programs are the companies providing for employees? 
  • Have the interests of business stakeholders been taken into account? How are training and development programs helping to promote sustainability values and culture? 
  • What is being measured? What measures are chosen and why? 
  • To what extent are aspects of environmental and social sustainability covered in an organization’s performance measurement system? 

This article was written by Maribel Esparcia Pérez and sub-edited by Claire Jones. Maribel is the Co-Founder & Business Developer of the European Sustainable Hospitality Club. Maribel’s purpose is to make sustainability a mainstream corporate concern in hospitality businesses and help leaders see the industry as a force for good. 

Maribel Esparcia Pérezhttps://www.eshclub.com/
I intend to drive the hospitality industry forward by focusing on "service and significance". University Professor & Partner at European Sustainable Hospitality Group. Change Agent Certified in Environmental, Social, and Good Corporate Governance leadership skills by ISSP, ESG researcher since 2017, and Keynote Speaker at key industry conferences as part of the CSW63 Sustainable Development Goals Commission at United Nations HQ. For more than a decade in operations at international chains and independent boutique four and five-star luxury properties in Europe. HospitalityNet Sustainability World Experts Panel member, RaizUp Sustainability Board member, and Hoteliers Guilds Academy Human rights and Sustainability researcher.

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