Green living, recycling, waste management have been the buzzwords in the hospitality industry for some time now. More and more hotels are making sure they’re doing their bit to protect the environment and reduce carbon footprint.
But now, a relatively new buzzword has made inroads. And this one goes beyond just the environment. It’s called ESG – Environment, Social and Governance.
Environmental, Social and good Governance is the umbrella term for sustainable activities in an economy. An economy where success will no longer be measured by profits alone. But by non-financial factors like how an organization creates an impact on Environmental factors such as carbon footprint, water usage, waste management, air pollution etc; Social factors like diversity, human rights, safety at workplace, employee wellbeing; and corporate Governing factors such as shareholders rights, transparency, audits, and ethical business practices.
While experts believe that ESG in India is still in its infancy, the buzz about it is certainly strong. Firstly, COVID 19 has led corporates to increase their emphasis on employee well-being, mitigating natural calamities, and managing partners/ stakeholders in times of uncertainty.
Secondly, PM Narendra Modi’s commitment at the United Nations Climate Change Conference in 2021 to achieve net zero emissions (cutting greenhouse gas emissions to as close to zero) by 2070, has pushed big corporates to start putting in place a robust ESG plan.
| What is ESG? |
| Environmental, Social, and Governance together make up a set of standards used by company leaders and other stakeholders (eg: investors, employees, customers and suppliers) to measure a company’s long-term impact on the environment and society. • Environmental criteria may include a company’s energy use, waste, pollution, natural resource conservation, and treatment of animals. The criteria can also be used in evaluating any environmental risks a company might face and how the company is managing those risks. For example, are there issues related to its ownership of contaminated land, its disposal of hazardous waste, its management of toxic emissions, or its compliance with government environmental regulations? • Social criteria look at a company’s internal and external business relationships. Does it prioritize and actively work toward achieving diversity, equity, and inclusion (DE&I) among its employees and leadership, the communities it serves and in which it operates, as well as at a global and societal level? Does it work with suppliers that hold the same values as it claims to hold? Does the company donate a percentage of its profits to the local community or encourage employees to perform volunteer work there? Do the company’s working conditions show high regard for its employees’ health and safety? Are other stakeholders’ interests considered? • With regard to Governance, investors may want to know that a company uses accurate and transparent accounting methods and that stockholders are given an opportunity to vote on important issues. They may also want assurances that companies avoid conflicts of interest in their choice of board members, don’t use political contributions to obtain unduly favorable treatment and, of course, don’t engage in illegal practices. |
While corporate India is taking significant strides on the ESG path, the hospitality industry is not far behind. Hotelier India speaks to market leaders and brand builders to understand more about how the industry is embracing ESG, where they are on the ESG map and how far they still have to go…
On The ESG Mission
We start by asking IHCL, India’s leading luxury hospitality chain, home to premier brands like the Taj, Vivanta, Ginger etc. Giving us a peek into their ESG journey so far, Gaurav Pokhariyal, Executive Vice President, Human Resources, IHCL, tells us, “In line with its belief that sustainable and responsible tourism is the only way forward, IHCL launched Paathya – a framework to drive its sustainability and social impact measures. Taking IHCL’s over century-old legacy ahead, Paathya forges a journey focused on environmental stewardship, social responsibility, and excellence in governance, and has defined several short and long-term goals to be fulfilled by 2030.”
From 100% elimination of single-use plastic across all its hotels to ensuring that 100% of waste water is reused, to creating employability for the deserving and marginalized, IHCL’s ESG goals are clear.
Pokhariyal shares some of their recent innovations in ESG with us. Says he, “On the environmental front, we have increased consumption of renewable energy, EarthCheck Certification (world’s leading science-based environmental certification and benchmarking program for the travel and tourism industry) for 78 IHCL hotels, installation of (EV) charging stations at 115 properties and partnering with IFC’s TechEmerge program for innovative cooling technologies. In addition to introducing bottling plants across 20 hotels to replace all plastic water bottles with reusable glass bottles, we have also switched to biodegradable wrapping of dry amenities in guest rooms. On the social front, we continue to invest in building industry-relevant talent pools with an aim to develop and support deserving youth and their families. With partnership across 16 skill centres, IHCL offers hospitality training courses across India including Guwahati in Assam to Jaipur in Rajasthan and Chamoli in Uttarakhand.”
They have also collaborated with UNESCO to help safeguard and promote the intangible cultural heritage of India. From Patachitra – a traditional scroll painting technique in West Bengal, to Ganga Aarti – the prayer ceremony at Dasashwamedh Ghat at Varanasi in Uttar Pradesh, travellers at IHCL hotels can experience the living heritage of the country.
Adds Pokhariyal, “As for the governance aspect, we adhere to rigorous standards, collaborating with responsible suppliers who prioritise ethical sourcing to ensure Ethical Supply Chain Management. Our enhanced Risk Management Framework includes training, audits, and compliance reviews for the safety and security of our stakeholders.”
Incidentally, the company has received several accolades for its efforts, including Sustaining Employees and Communities through the pandemic and Contributing to the Cultural Heritage of India at the International Convention of WTM Responsible Tourism, an international forum to drive responsible tourism globally.
Towards a Fruitful Tomorrow
While Paathya is defining IHCL’s ESG strategies, Journey to Tomorrow, a 10-year action plan to drive change, outlines IHG’s (InterContinental Hotel Group) ESG endeavours.
Sudeep Jain, MD, SWA, IHG Hotels & Resorts, reveals, “With a massive footprint across the globe, we believe that the tourism and hospitality sectors play an important role in working towards a sustainable future. At IHG, we embrace our responsibility and the opportunity to make a positive difference and help shape the future of responsible travel.”
Journey to Tomorrow, he adds, is called a journey, since he believes, “We haven’t got all the answers yet, but we see this as an important framework to bring together all who stay, work, and partner with us to shape the future of responsible travel. Journey to Tomorrow embodies IHG’s strengthened commitment to make sure we do what’s right, not just what’s needed, and we are determined to contribute towards positive social and economic change, to stand up for key issues such as diversity, equity and inclusion, and human rights, and to make more responsible environmental choices.”
Whether it’s through supporting disaster relief efforts, tackling food poverty, or by providing skills’ training that drives social and economic change, IHG seizes opportunities to improve lives. “And for our planet, we are working with every one of our hotels to reduce carbon emissions in line with climate science, eliminate single-use items or move to reusable/ recyclable alternatives, reduce food waste. Water conservation is also a priority, and we are implementing tools to reduce the water footprint of our hotels while collaborating locally to tackle water stress in high-risk areas.”
| Why is ESG important in India? |
| In India’s corporate ecosystem, there have been two major developments in the context of Sustainability/ ESG Framework. The first was Corporate Social Responsibility (CSR) reporting and spending being made mandatory under the Companies Act, 2013. The second is the Securities and Exchange Board of India (SEBI) making the Business Responsibility and Sustainability Report (BRSR) mandatory for the top 1,000 listed companies by market capitalisation. This is a step forward in widespread adoption of ESG framework in corporate decision-making and business practices. |
A Commitment of a life-time
Zubin Saxena, Managing Director & Area Senior Vice President – South Asia, Radisson Hotel Group, believes that there is no question that along with the continued rapid growth of the industry comes a mounting responsibility to ensure that the growth is sustainable. “Adhering to Environmental, Social, and Governance (ESG) goals and standards is not only a social responsibility for any business but is also financially viable. At Radisson Hotel Group, we are committed to integrating sustainability principles across our properties in India. We are committed to the Glasgow Declaration (on Climate Action in Tourism), and aim to reach net-zero emissions by 2050,” says Saxena.
To achieve this goal, they are focusing on enhancing the energy efficiency of hotel buildings, reducing natural resource usage, transitioning to renewable energy, and eliminating single-use plastics. On the social responsibility front, they partnered with multiple organizations and the local communities where they operate by providing basic human necessities such as food, shelter, water, sanitation, and hygiene to those in need. They work in partnership with SOS Children’s Villages International to ensure that children grow up in safe and caring family environments. “Our commitment to global water health is reflected in the partnership with Just a Drop to bring safe drinking water to water-stressed communities. In our F&B segment, we have implemented industry-leading practices such as the Re-purposing of Used Cooking Oil (RUCO), demonstrating our commitment to sustainable and responsible operations.”
| The rise of ESG in Hospitality |
| Gautam Khanna believes that the adoption of Environmental, Social, and Governance (ESG) practices in the Indian hospitality industry has been gaining traction in recent years. Several factors contribute to this increasing focus on ESG: • Government Initiatives: The Indian Government has been actively promoting sustainable practices across various sectors, including hospitality. Initiatives like Swachh Bharat Abhiyan (Clean India Mission) and the Green India Mission aim to improve environmental sustainability and cleanliness in the country. Additionally, regulatory measures, such as environmental compliance requirements, are encouraging hospitality businesses to adopt ESG practices. • Consumer Demand: There is a growing awareness among consumers about sustainability and social responsibility. Travellers, both domestic and international, are increasingly seeking eco-friendly and socially responsible accommodation options. This demand is pushing the hospitality industry to adopt ESG practices to attract and retain environmentally conscious customers. • Industry Associations and Certifications: Industry associations and organizations are playing a significant role in promoting ESG practices in the Indian hospitality sector. For example, the Indian Green Building Council (IGBC) offers certifications like LEED (Leadership in Energy and Environmental Design) for green hotels, encouraging sustainable building practices. These certifications incentivize hospitality businesses to incorporate ESG principles into their operations. • Corporate Social Responsibility (CSR): Many hospitality companies in India have recognized the importance of CSR initiatives. They are actively engaging in activities such as community development, education programs, and environmental conservation. Integrating ESG practices into their CSR strategies is a natural progression for these companies. |
Radisson’s core ESG strategy, however, revolves around three key pillars: Think People, Think Community, Think Planet. Explains Saxena, “We are committed to incorporating sustainable and greener practices throughout our operations. In collaboration with Sunfuel, we are actively enhancing the electric vehicle (EV) infrastructure across our hotels in India. With 110 operating hotels, this is the largest deployment of this kind of infrastructure, and we are working on a chain level to make all RHG partner hotels EV-friendly. Through this strategic partnership, RHG aims to create a sustainable ecosystem for travellers and help them adopt safer, more sustainable, and more accessible methods of travel.
“Additionally, we have implemented impactful initiatives like Soap for Hope, Linen for Life, and the Flush Me Not Program. Soap for Hope is a soap recycling project that takes leftover soap from our hotels and recycles it into new and sanitized bars of soap. These new bars of soap are then donated to those in need and this program is implemented globally. Linen for Life and Flush Me Not Program are sustainable practices for linen and water management.”
Responsible Luxury – The Name of the Game
ITC Hotels claims to have been the by-word for sustainability in the hospitality industry for over a decade. According to H C Vinayaka, Vice-President, Technical, EHS and Sustainability, ITC Hotels, ITC pioneered the concept of ‘Responsible Luxury’ – delivering luxury experiences with planet positive experiences.
Says Vinayaka, “At the design stage, each ITC Hotel adheres to the highest global and national green building standards to ensure that energy, water and solid waste efficiencies are maximized. From optimizing the use of natural light to meeting electrical demand through wind and solar energy; conserving water through harvesting rainwater and treating and recycling water; reducing, reusing and recycling the solid waste generated, every effort is made to preserve the eco-system around the hotels.”
Some of ITC’s achievements here are: Surpassing the 2030 emission targets consecutively for the second year (UN Climate Change, Paris agreement – ITP Report) for hospitality industry; being the largest hotel chain in the world with 22 LEED Platinum Certified Hotels, the highest rating awarded by US Green Building Council (USGBC); installing water purification and glass bottling plant to eliminate the usage of plastic water bottles; recycling almost entire waste generated at hotels with the use of organic waste converters; using electrical energy through renewable sources.
Likewise, Travel with Purpose is Hilton’s ESG strategy. Says Kiron Bose, Director, Engineering Operations, India, Hilton, “Our environmental goals include paving the way to net zero. All our hotels are progressing well towards lower energy consumption – decreased energy consumption in 2022 vs 2019. 100% of our hotels are mapped against climate risks.”
They are working towards removing single use plastic across managed hotels; have installed water bottling plants; removed plastic straw, stirrer, cling wrapper, sugar sachet, toothpicks, jam containers etc; and are using bio-degradable garbage bags.
Some of Hilton’s social and governance goals for ESG include: Creating 5 million learning and growth opportunities for communities with a focus on underrepresented groups by 2030; achieving gender parity at global leadership levels by 2027; promoting responsible, inclusive conduct across 100% of their value chain operations; and advocating for public policies that advance travel with purpose goals.
Acknowledging his hotel’s commitment to sustainability, Anoop Pandey, General Manager, JW Marriott Mussoorie Walnut Grove Resort & Spa, tells us how his hotel aims to create a luxurious experience while upholding environmentally responsible practices. “To contribute to afforestation and conservation efforts, the hotel offers the ‘Implant Nature’ initiative, allowing guests to participate in planting saplings in the Himalayan foothills. Regular updates on the sapling’s growth are provided to create a sense of connection and responsibility. Additionally, the hotel sources ingredients locally, within a 200-kilometer radius, supporting sustainable farming and self-employment for local farmers in 26 villages.”
The hotel also promotes eco-adventure activities, tree planting, and plastic recycling to raise awareness and encourage sustainable practices. They have replaced plastic containers with eco-friendly alternatives such as paper, bamboo, glass, and metal. Water bottles in restaurants transitioned to glass, and biodegradable materials are used for minibar and bathroom amenities. Serve ware and props in buffets are made from ceramic, porcelain, glass, wood, or metal. By implementing these comprehensive sustainability initiatives, their commitment extends beyond environmental sustainability to social responsibility as well.
They also actively support the Garhwal English Medium School (GEMS), a charitable school that educates underprivileged students from approximately 25 villages in Uttarakhand, and provides infrastructure support, regular product deliveries, and sponsors the education fees of some students.
GEMS began in 2009 with just 13 students in a cow shed and has now grown to include 160 students. Aiming to provide quality English medium education comparable to leading schools in India, their goal is to become a world-class charitable educational institution with the support of donors.
Different Strokes
Adding a very insightful dimension on the subject, Sanjay Sethi, MD and CEO, Chalet Hotels, tells us how their company is doing its bit to be ESG-compliant. “Climate Group is the global body which has a Climate Week in New York at the UN General Assembly every year. They have three key initiatives for corporates to follow, and we’ve committed to all three. All our vehicles will be EVs by
2025; we will up our energy productivity – double the revenue from the same consumption of energy – by 2029; all our hotels will use renewable energy by 2030. I strongly believe that when you make commitments now, you work towards them.
“We also listed ourselves in the Dow Jones Sustainability Index – the index which measures ESG as a whole, and not just environment initiatives by corporates. We had our first year rating last year. This year, we hit 43, which was a 35% improvement, and we are above the mean average of hotel companies globally. Our aspiration is to get to 70.
“The third initiative that we undertook was going carbon neutral. We follow the route of the scientific calculation for carbon footprint and are now in stage 3 – the stage where you go beyond your own carbon footprint and calculate the carbon footprint of the consumers that use you. For example, at stage 2, I calculated what my hotel’s carbon footprint is when I operate my hotel. At stage 3, I calculate the carbon footprint of the guests – how much carbon they’ve created on the flights or in the cars that they have taken etc. It’s complex but we’re now embarking on the stage 3 of analysis.”
On the governance side, he cites an example of how the promoters at Chalet do not take the Chairperson position, purely as a good governance practice and to ensure that the company’s governance is of the highest quality and chaired by independent directors. “Likewise on the social side, I keep telling my team not to do 100 different things; but to do things which will make a meaningful difference. We adopt a location in the vicinity and then go all out and improve the quality of life of the people there. We get women from the neighbouring areas and involve them in food festivals, and create employment for them. As a group, we are also very strong on diversity. We have employed transgenders in our company, and to make a point, we have one right at the reception so that it should all look normal. We conduct workshops on diversity and I’m proud to say that one of our directors is from the LGBT community, who is very vocal about the issues the community faces,” he reveals. Here’s one institution that promotes inclusion and diversity in its true sense.
Challenges on the road to ESG
As seen till now, quite a few hotels have made successful forays on the ESG road. But what are the bumps, if any, one could normally encounter ? Gautam Khanna, Director of Operations, Raffles Udaipur, one of Accor’s Luxury properties in India, helps list the challenges:
• Awareness and Education: There is a need to increase awareness and educate hospitality stakeholders about the benefits and best practices of ESG. This includes training staff, raising awareness among hotel owners and managers, and sharing success stories of sustainable initiatives.
• Infrastructure and Resources: Adopting ESG practices often requires investments in technology, infrastructure, and training. Support in terms of incentives, funding, and capacity-building programs can facilitate wider adoption of ESG practices.
• Collaboration and Industry Standards: Establishing industry-wide standards and guidelines for ESG practices can provide a common framework and benchmarks for hotels to follow.
So while he believes that overall, the Indian hospitality industry is gradually recognizing the importance of ESG practices and taking steps towards their adoption, with increasing awareness, Government support and consumer demand, it is likely that more hotels and hospitality businesses in India will embrace more ESG practices in the future.
As for the practices Accor follows across its properties, here’s detailing some of them: Implementing energy-saving measures, such as using LED lighting, energy-efficient appliances, and HVAC systems; conserving water by adopting water-efficient technologies, promoting responsible water usage, and implementing initiatives for water recycling and rainwater harvesting; managing waste by implementing waste reduction and recycling programs, including proper waste segregation, and composting where applicable; supporting local artisans, sourcing local products, and partnering with local charities or NGOs to promote education and employment; prioritizing the health and well-being of employees through fair labour practices, training and development programs, and promoting diversity and inclusion; emphasizing farm-to-table concepts and locally sourced ingredients.
How far have we come?
Which brings us to another pertinent question: How important it is for hospitality consultants to check on ESG reports of clients before onboarding them? Vijay Thacker, Director, Horwath HTL, and a veteran in hospitality and tourism consulting, says, “For a long time now, that was not looked at as our responsibility, but the last couple of years, looking at this aspect has become much more relevant. We are sure there to guide people or mould projects into a greater degree of sustainability and awareness.”
So, what stage are we in right now? Beginner’s, middle level or above average? We ask Thacker to give his verdict on how far the hospitality industry has come when it comes to implementing a sound ESG strategy.
Thacker says very matter-of-factly, “Someone may have done lots, someone may have done less. I would stay away from classifying something as young or nascent. All I’d say is, as an industry, a lot more needs to be done, and can be done, and that needs to be recognised first.”
Citing a simple example, he says, “When a destination suddenly opens up, we often end up creating supply in numbers, which overwhelms the destination and its capacity to serve. This is hurtful for the destination and for the ecology of that place. That is something we are not looking at. We need to be mindful of accepting projects that are ESG-compliant and not damaging to the ecology. Hotel companies will have to look at all this as a basic parameter. I don’t know how much of that is being examined in depth right now.
“But if destinations that are enjoyable today become unbearable tomorrow because it may become too hot in the future, then that destination is dead. So there is a need to correct things now. If we do not take steps now, nature is not going to let us sustain our business.”
Golden words indeed!
While it may be a long road to tread before we can call ourselves fully ESG-driven, a great start has been made, and that is surely something to cheer about.
