The growing relevance of ESG

Farhat Jamal Jun 28, 2022

I was flipping through some articles online and it brought me immense joy and pride to read that the travel market in India is projected to reach US$ 125 billion by FY27 from an estimated US$ 75 billion in FY20. By 2029, tourism is expected to account for close to a whopping 53 million jobs, an increase from 31.8 million in 2020. That is not all. The industry’s direct contribution to the GDP of the country is expected to record an annual growth rate of 10.35 per cent between 2019 and 2028, an increase from US$ 191.3 billion in 2019 to US$ 512 billion in 2029.

Over four decades of living, breathing and celebrating life as an hotelier, the tryst continues. Also witnessed the industry’s glorious evolution through the adaptation of technology, clever creativity and ingenious imagination, all of it making the industry and India proud.

I am sure those from the profession and others who have experienced the warmth, love and generous hospitality will agree that travel and tourism is not just a profession; it is an “emotion”. An emotion and a way of life dedicated to helping humans explore magnificent experiences, redefine comfort and happiness. It follows its own unique code of conduct, dedicated to the “happiness of others through creating memorable experiences”.

In the enormous responsibility we shoulder for the sector’s progression, we must stay aware that juxtaposed with this generous hospitality is the impact we create on our external environment.

Questions we must honestly ask ourselves are: Why do we do what we do?, Are responsible Environmental, Social and Governance (ESG) practices a way of business for us? Or are they merely a source of inspiration in our communication or as an accounting and reporting tool to exhibit our compliance and positioning? And are we incrementally exploring and creating balanced options that are swift, real, practical and will yield results in the short, medium and long run?

The sub-categories under each of the three letters – ESG – are defined in detail and fall in parts under the 17 United Nations Sustainable Development Goals (UNSDGs). The SDGs stand for a call for action by all countries and are vital for a recovery that leads to greener, more inclusive economies and stronger, more resilient societies. We have to take ownership for measures that we are adopting to reduce the impact our business has on an already depleted environment.

Torrens University Australia’s states, “Hotels can also have a direct negative impact on biodiversity, due to excessive use of resources, purchasing unsustainably farmed produce, waste, irresponsible tourism and unsustainable design. Restaurants have a huge role to play in countering biodiversity loss. Food production is the economic sector with the largest impact on biodiversity, contributing 60-70 per cent to date of total biodiversity”.

Closer home, leading hotels have been penalised or closed down because of wastewater treatment plants not being in place, and untreated water flowing into the drains and into the rivers. A five-star hotel was recently fined lakhs for flouting environmental norms and causing damage to the environment. Closely related with this are hotels and restaurants celebrated for adopting some wonderful diverse practices.

In March 2022, Indian hotels pledged to eliminate single-use plastic across properties and a commitment to skill one lakh youth, both by 2030. Also, 100 per cent of the eligible hotels to be earth check certified over next five years as part of its sustainability and social impact measures. Absolutely commendable effort.

Lemon Tree Hotels has adopted a social inclusivity work ethos where inclusivity and profit are partners in doing good work. Towards this, they have brought in people from diverse backgrounds, abilities and ethnicities, offering them work as a unified team with a common goal.

Other heart-warming examples are of coffee shops, restaurants and fast food chains; some on ground action include Café Coffee Day who has worked with non-profits to empower differently abled, Costa Coffee, Ishaara and KFC employing hearing impaired people with warm smiles that light you up. The examples abound, cheering us and opening the path.

Another case in point is of Neemrana Hotels. They train, develop skills and provide livelihoods to people from within their communities while also ensuring the ecology around their heritage properties is preserved.

ITC has some remarkable practices from elimination of single-use plastic products, radiation harmoniser, water efficiency initiatives and more.

Collective efforts are important and businesses can act as the springboard for system-level change in the face of significant issues of climate change and income inequality.

So, towards facilitating collective efforts, here are my recommendations on what we can undertake as small steps for a sustainable and stronger tomorrow. This will require new habits, change in paradigms, reframing internal and external perspective and most of all, thinking differently and learning some new ideas.

Environmental

From inception to completion, we have to begin using local and sustainable products for construction. The industry will have to embrace technologies that save energy or explore alternate sources of energy like use of hydrogen, ethanol, solar or wind power. Adoption of recycling at various levels must get embedded in the operating systems. And let us put measures and communication that will help and encourage guests to go green. Space permitting planting own gardens and composting to manage food waste. Also adopt laundry processes that not only extend the life of the linen but adopt machines that use less chemicals and water. Lot of the above is happening but we’ve to make these practises non-negotiable and more pervasive.

At times, I feel we are existing in a silo not moving beyond our immediate environment, extend support to the civic society in their efforts towards saving our environment; a small initiative of Electric Vehicle Charging Station in the hotels and restaurants can have the catalytic effort of increased adoption of electric vehicles in the country. What a large scale mass impact this could create! One has read about IHCL, Radisson, Fern and Chalet Hotels tie up with power companies to provide charging stations across their hotels in India.We must remember, that it is the small efforts in the right direction that form a movement.

Social

Social awareness is the key. Keeping a view of our internal and external stakeholders and aiding to their well-being, providing equal opportunities, maintaining fair practices in compensations, timings and business, investing in upgrading skillsets will support the approach to an equitable and sustainable future. Sharing facilities for philanthropic purposes, impactful social causes to create shared value. Lastly, inclusion in diversity, equality, race, disability and mental abilities as mentioned earlier in some inspirational case studies, are crucial elements that can be adopted. I recommend putting clear metrics in place to help systemise human engagement and expectations.

Governance

Guiding ethics could be the most fundamental aspect of governance as they trickle down and reflect in the company’s approach to all other factors. The rising concept of ethical wallets encourage consumers to purchase from values that are aligned to their own.

Being local under global, ensuring local products, facilities, experiences and produce. Besides that, financial stewardship, cyber security diligence, external independent directors, all possible audits and transparent board meetings.

In conclusion, I can’t emphasise enough that our planet, our Titanic is at a submerging point, and we are the only ones who can prevent this ship from sinking. It is time to action our sentiments.