The Hospitality Industry and the Environment
Nature and the hospitality sector are invariably linked; but how will the environmental, social, governance(ESG) and hospitality go hand in hand? Hotels and resorts rely heavily on the beauty of the natural environment to attract patrons and drive demand. Yet, the hospitality sector has also developed a reputation for being wasteful and polluting. How can technology and data transform all of that towards ESG and decarbonisation?
Today, the sector makes up about 5% of the world’s greenhouse gas (GHG) emissions, with the figure projected to grow by an overwhelming 400% by 2035. Travel accommodations account for over 22% of the industry’s GHG emissions, totalling about 363 million tonnes or the equivalent of emissions generated by 70 million homes’ electricity usage for a year.
Sheena Ang, Senior Business Develop Manager at STACS, elaborates on why the hospitality industry has traditionally been particularly wasteful:
“For a long time, guests have viewed hotels and resorts as establishments to unwind and enjoy themselves. As such, they tended to spare little thought for their carbon footprint.”
According to a report published by the Sustainable Hotel Alliance, the industry must drastically reduce its carbon emissions by 66% and 90% by 2030 and 2050 respectively to meet the thresholds set in the Paris Climate Change Agreement (‘Paris Agreement’). Clearly, much needs to be done to reach these targets.
The Green Transition to powering ESG in hospitality
Regulation by governing bodies and the prospect of greater, more sustained profits have been key drivers for ESG in the hospitality sector today.
Globally, the Paris Agreement guides the hospitality sector’s green ambitions. Locally, the Singapore Hotel Association and the Singapore Tourism Board jointly launched the Hotel Sustainability Roadmap in March 2021, outlining 2 Key Targets for the hospitality sector to reach:
- 60% of hotel room stock to achieve internationally recognised hotel sustainability certification (e.g. by GSTC) by 2025
- Commence tracking of emissions by 2023, reduce emissions by 2030, with a view to achieve net zero by 2050
Source: Singapore Tourism Board
Amidst the emergence of the “conscious traveller”, hotels are also beginning to understand that “what’s good for society may be what’s good for business”, with some of the largest multinational hotel companies like the Four Seasons Hotels Ltd., Marriott International Inc., and Hyatt Hotels Corp. all making pledges to invest in sustainability initiatives
Challenges in Going Green
If the need to go green is so apparent, why are businesses not doing more to ramp up their sustainability efforts?
Difficulties in Measuring Impact
While a significant number of hotels have introduced initiatives promoting sustainability, they still fail to answer questions on the tangible impact of their actions, like “How much impact?”, and “Is this getting us to net zero quickly enough?”. This issue occurs in large part because most hotels lack the technology needed to measure and monitor the performance of their sustainability efforts, in order to modify their course of action to truly deliver positive environmental impact.
Hotels are thus unsure of whether more needs to be done on their part, nor are they able to quantify the effectiveness of a particular initiative.
High Costs to Go Green
Hotels often experience sizeable inertia in adopting green solutions, since integrating sustainability into their business often requires some level of capital, and eco-friendly options are oftentimes more expensive.
While green financing offers a viable solution to this issue, financial institutions tend to require hotels to have attained some form of green certification, like the IFC Edge Certificate, prior to providing financing. However, hotels also face difficulty in attaining green certification because they have no means of providing certification bodies with data of their sustainability efforts.
The Road to ESG Finance using Technology and Data
What the hospitality sector needs, then, is technology that enables the accurate and ongoing measurement of GHG emissions, and emissions targets, as well as better digital tools to provide value-added insight into green data.
Concept to Reality: The Citadines Berawa Beach Bali-HSBC Live Use Case, Built on STACS’ ESGpedia and Envision Digital’s AIoT Platform for Decarbonisation
Citadines Bali Adopts Digital Tools to Decarbonise its OperationsEarlier in October 2022, Citadines Berawa Beach Bali (’Citadines Bali’) announced that it had signed a financing facility from PT Bank HSBC Indonesia (‘HSBC’), to adopt digital tools from STACS and Envision Digital to support its decarbonisation and green certification journey. This made Citadines Bali the first hotel in Bali to adopt digital tools to track emissions from its operations.
On the technological front, Envision Digital’s smart Internet of Things (IoT) will be installed to measure and track GHG emissions by Citadines Bali more accurately. Utilising Envision Digital’s Ark Smart Decarbonisation system will also enable Citadines Bali to effectively quantify their emissions and subsequently target reductions.
Following this, Citadines Bali’s emissions data would be channelled to STACS’ ESGpedia registry via technical integration, allowing financial institutions to leverage holistic data and digital tools on ESGpedia to make better ESG financing decisions and more effectively monitor its green portfolio on an ongoing basis.
The live use case presented here is scalable and can be replicated across the entire hospitality industry, enabling hotels and buildings across Asia to transform to be more sustainable through technology and data.
What ‘Good’ Looks Like – Empowering every guest to be net zero heroes
When asked about what “good” sustainability looked like in the hospitality sector, Ang alluded to the myriad opportunities hotels possessed to educate their guests on the need to reduce their emissions, and also provide them with a viable means to do so, such as fractionalised carbon credits.
She added, “Perhaps one day, in the hospitality sector, hotels would be able to measure and display the carbon footprint of each guest’s stay to them, and offer them a chance to offset it themselves. This way, individuals would now be able to play an even more direct role in contributing towards the industry’s net zero goals”.
Read our Industry Insights piece on high-quality carbon credits here.
Cultivating ESG within the hospitality industry is now more accessible than ever
As the hospitality sector inches closer to the 2050 deadline to halt the irreversible effects of climate change, it is apparent that corporate sustainability strategies must be targeted and ultimately have a positive, measurable impact on the environment.
While this often requires large amounts of capital expenditure, technology and data form the bridge linking players in the hospitality industry to financial institutions and certification bodies, unlocking ESG finance for the entire sector and paving the way for truly tangible positive environmental impact.