Hoteliers, venue and event managers have faced a rapidly evolving landscape over the past 2 years with many taking this time to rethink existing systems and processes to be more efficient but also more aligned to modern expectations. As part of this, many are developing specific and meaningful Environmental Social Governance (ESG) policies, all signs point to ESG policy becoming a baseline expectation for companies that operate in an ever more conscientious and interconnected marketplace.
Environmental Social Governance (ESG) is a framework that helps organisations to integrate environmental and social good aspects into their core business strategy, it’s a notion that has held the attention of many investors, and has trickled down to influence business purchase decisions within the meetings and events sector with sponsors choosing to vote with their wallet for suppliers, events and venues they see as upholding strong ESG ideals.
So what do expectations of ESG policies mean for the meetings and events sector? A growing number of organisations are taking meaningful steps to decrease the carbon footprint of doing business, with at least 21% of the top 2000 companies globally already committed to net-zero by 2050. Ensuring events and conferences are doing everything they can to align with sustainability and social expectations will ensure delegates from all organisations can be in attendance or exhibit as well as advocate for events with an active approach to ESG over those that may choose to ignore it.
E - Environmental
The clearest beacon for a growing number of ethical investors and organisations to a company's future preparedness is their commitment to environmental sustainability. These pledges vary greatly but generally, those in the hospitality sector take the opportunity to lay out a framework of how they will achieve net-zero by 2050 and what specific policies they are implementing today to get there. The events sector is at risk of being viewed as a propagator of single-use plastics due to the nature of large public events, so commitments to recycling and composting programs along with non-plastic alternatives can demonstrate a more sustainable approach to prospective attendees, sponsors and exhibitors.
The Hospitality Professionals Association (HOSPA) recently chose sustainability as the core focus of its latest HOSPACE 2021 conference, Jane Pendlebury, CEO of HOSPA, commented: “As we continue to recover from Covid, we must look to build a better and more resilient hospitality industry that’s fit for the future. And as part of that, it’s not just about financial recovery – it’s clear that sustainability must be at the heart of the rebuilding process.”
To support this approach HOSPA is now providing a Sustainability Toolkit via their website (available here) to assist those within the hospitality industry with the transition.
S - Social
Community expectations around social criteria are a moving bar and operators in the hospitality industry can help ensure its meeting expectations and avoiding unnecessary business risk by consulting with employees at all levels of an organisation and taking proactive steps to ensure that procedures are in place. The Social in ESG refers to the relationship an institution has to its employees, suppliers and the society in which it operates, many large organisations ESG policies have a strong focus on industrial relations and the safeguards in place that allow staff to perform their role in a safe and supportive environment, we have seen a number of occasions where a soft approach to social policy can result in widespread community outrange and ultimately affect the bottom line.
Unlike environmental expectations, social requirements will vary greatly depending on the regions operated in, a notable consideration is if you have a remote workforce spread across geographical regions you should endeavour to roll out social programs across all employees when practical, not just those in countries that require it to foster a deeper feeling of equity through employees and avoid disappointment.
Hiring is top of mind for many in the hospitality sector at the moment, with many companies struggling to find, employ and retain staff in the post covid landscape. Robust and meaningful social policies can help attract and retain staff by providing opportunities and an inclusive culture that may outshine competitors offers.
Large events and venues that utilise many external suppliers from catering, logistics to AV and more should look to develop and publish readily available robust frameworks outlining the expectations of those external organisations. Often overlooked, the actions of a supplier may be of high risk to impact the reputation of an event or venue utilising their service, due diligence needs to be undertaken to ensure a supplier's ESG policies align with the event or venue.
G - Governance
Operators that provide a strong, clear and predictable approach to governance signals to investors, customers and the broader community that stakeholders and decision-makers will act in accordance with clear pre-defined boundaries, this transparency in governance provides stability and assurance to other companies for example aligning themselves with a certain event will be a predictable and lower risk decision if it aligns with their ESG values. Venues and events can leverage a clearly defined governance framework to give prospective clients or customers stability, outlining how the organisation may react to a new covid outbreak, a criminal event or any situation that may arise and the bounds it will make decisions within.
Is it worth it?
Management consulting group Mckinsey have found that implementing robust ESG policies may actually create value for firms and counter the risk of not implementing any policy, which could cause a drag on value creation longer term. Larger operators are finding significant short-term savings by overhauling energy efficiency as part of their ESG approach with Marriott reportedly saving over $1 million at one property on power alone.
Overall it seems that eventually many aspects of ESG, especially from a sustainability perspective will become commonplace and potentially part of regulation in many regions so getting ahead of the curve now allows a longer adjustment period and less risk of impact on operations in the future.
Read more about how the iVvy platform is helping Comwell Hotel Group meet their ESG objectives >>