Talking Point: ESG reporting in travel & tourism

Using ESG reporting to inform your audience

Using ESG reporting to inform your audience

Last month we looked at how – and why – to communicate your sustainability programmes to your guests and other stakeholders. Here, Olivia Ruggles-Brise, Director of Policy and Research at the World Travel & Tourism Council (WTTC) explains why they’ve produced guidance on Environmental, Social and Governance Reporting, to help make that easier.

Travel & Tourism is growing and growing fast. Latest forecasts suggest a rate of 4% per year over the next decade, and the World Tourism Organization is estimating 1.8 billion annual international travellers by 2030, and many billions more domestic. While such growth is an exciting prospect economically - 80 million new jobs will be created through Travel & Tourism activity by 2025 - it comes with significant challenges in terms of protecting the people and places that the sector depends on.

As a sector that is as diverse as it is geographically spread, finding common methodologies, metrics, and even language to measure and communicate sustainability is enormously challenging. WTTC and ITP have developed the Hotel Carbon Measurement Initiative to provide hotels with a common methodology for measuring carbon emissions; the Global Sustainable Tourism Council has developed sustainable tourism criteria in a significant step to align industry action; and ICAO has standards for measuring and reporting aviation emissions.

Nevertheless, when it comes to communicating and consolidating how the industry is performing, there is still much work to be done. That is why WTTC, at the behest of its Members, has developed guidance for Environmental, Social, and Governance (ESG) reporting for Travel & Tourism companies.  We see ESG reporting, be it through established frameworks such as GRI and CDP or other methods, as a real opportunity for the sector to start communicating the commitment that exists towards ensuring a sustainable future for Travel & Tourism.

There are many reasons why now is the time for T&T companies to start taking ESG reporting seriously.

First of all, there is an increasing body of evidence that suggests that companies that measure, account for, and report their ESG impacts regularly see real improvements in their bottom-line performance.

However, the rationale is wider than the purely economic.

ESG reporting is a global trend and is here to stay. Research shows that Travel & Tourism is behind the curve in getting on board. Although over half of WTTC’s Member companies publish ESG reports annually, we estimate that only around 13% of the sector is actively engaged in reporting. This is a long way behind the rates of 76%, 73%, and 71% for companies in the Americas, Europe, and Asia Pacific respectively calculated by KPMG.

What is more, the trend is a move towards mandated reporting and regulation, so soon companies will have to report - or explain why they do not report. Travel & Tourism companies need to be prepared for this.

And it’s not just countries and stock exchanges that are requiring ESG information. Corporate customers of Travel & Tourism businesses themselves have to report on their impacts. They often include their business travel footprint within their own calculations and supply chain evaluation, requesting this information and even include it in RFPs.  There have even been examples of large corporations pledging to cut down business travel in order to reduce their environmental impacts. Travel & Tourism needs to show these customers that reductions are being made at the source.

Lack of transparency and accountability in ESG issues can lead to negative perceptions of a company, particularly amongst new employees and local stakeholders. This is particularly relevant for Travel & Tourism, which struggles to get good people and is highly dependent on host communities for product quality.  Reporting is a robust way of showing how a company is taking its responsibility seriously.

However, our research shows that those driving and designing ESG Reporting don’t necessarily understand the complex nature of Travel & Tourism’s operational and ownership structures. As such it is often difficult for the sector to fit its activities into existing frameworks, which can lead to misleading results and negative assumptions.  The more companies that report and the more engagement they have with these entities, the more power the sector will have to influence the future of reporting.

Finally, reporting generates a wealth of best practices, resources, and even competition.  If more companies report, the sector as a whole starts to benefit.

To find out more about WTTC’s “Environmental, Social & Governance reporting in Travel & Tourism: Trends, Outlook and Guidance” please visit Environmental, Social and Governance Reporting. The report contains an overview of current trends in reporting; a look at the status of reporting in Travel & Tourism, including the areas in which companies are focusing their efforts; a 12-step guide to starting reporting; and issue briefs covering the key cross-cutting topics relevant to the sector.

The full report can be downloaded free of charge from here. Report summary is available in both English and Spanish.

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