In this extract of our FREE 355 page book, The Hospitality Industry’s ESG and Sustainability Handbook, published 2025, we discuss the strategic imperative of ESG in hospitality.

Leading the Charge in Sustainable Hospitality

The Hospitality Industry at a Crossroads

The hospitality industry stands at a transformative moment in history, shaped by unprecedented global challenges and opportunities. Climate change, shifting consumer expectations, and evolving technologies are reshaping the way the sector operates, placing Environmental, Social, and Governance (ESG) principles at the forefront of strategic decision-making. For leaders in hospitality, ESG is no longer a choice—it is the key to long-term resilience and success.

Climate change poses an existential challenge to hospitality businesses worldwide. Coastal resorts face rising sea levels that threaten their very existence, while unpredictable weather patterns disrupt peak tourist seasons, reducing revenue and stability. Destinations once defined by stable climates now grapple with adapting to environmental changes while striving to contribute to global sustainability efforts. Hoteliers are increasingly scrutinised for their environmental footprint. From energy consumption to water usage and waste management, the demand for accountability is growing—not only from governments but also from an increasingly eco-conscious traveller base. Carbon neutrality, once a bold aspiration, is now an industry benchmark. Leading examples, such as The Brando in French Polynesia, illustrate how renewable energy and sustainable practices can align profitability with environmental responsibility.

Consumer priorities are evolving at an unprecedented pace. Today’s travellers demand more than luxury; they seek experiences that align with their values. Millennials and Gen Z, in particular, are driving this shift, prioritising sustainability and ethical practices when selecting accommodations. According to a 2023 report by Booking.com, 78% of global travellers prefer sustainable travel options, with many willing to pay a premium for hotels that reflect their values. For hospitality businesses, these shifting expectations are both a challenge and an opportunity. Properties that fail to adapt risk losing market share to competitors that prioritise ESG principles. Conversely, those that embrace sustainability gain access to a growing segment of loyal, values-driven consumers, strengthening both brand reputation and profitability.

Technology is a critical enabler of ESG integration in hospitality, offering innovative solutions to enhance sustainability. Smart energy management systems, for example, optimise resource consumption while reducing operational costs. Internet of Things (IoT) solutions, such as smart thermostats and leak detection systems, allow properties to cut down on energy and water waste while enhancing guest comfort. Blockchain technology, meanwhile, has revolutionised supply chain transparency, ensuring that materials and goods align with ESG goals. By tracking the journey of goods from source to destination, blockchain reduces risks such as unethical labour practices and excessive carbon emissions. For hoteliers, these tools offer new ways to align operations with the demands of stakeholders.

As one of the world’s largest industries, hospitality wields significant influence on the global stage. With this influence comes a profound responsibility to lead by example. Beyond environmental concerns, the sector must address pressing social issues, including fair labour practices, diversity and inclusion, and community engagement. Properties that prioritise social value—through initiatives like hiring local talent, sourcing from regional suppliers, or investing in community infrastructure—contribute to long-term positive change. For example, boutique properties like Fogo Island Inn in Canada have shown how reinvesting profits into local communities can revitalise regions and create lasting social and economic benefits. By embedding these principles into their operations, hospitality businesses have the power to drive transformative change at both local and global levels.

The hospitality industry is at a crossroads, faced with a clear choice: embrace the ESG revolution or risk irrelevance in an increasingly competitive, values-driven marketplace. The path forward is one of innovation, responsibility, and resilience. By prioritising sustainability, social responsibility, and governance, hospitality leaders can future-proof their businesses while contributing meaningfully to a more sustainable world.

This book serves as a practical guide for leaders ready to take action. Through insights, case studies, and proven frameworks, it offers the tools needed to integrate ESG into daily operations, inspiring both small hoteliers and global chains to lead the charge. The future of hospitality is being written now—together, we can ensure it is a future built on responsibility, inclusion, and environmental care.

The Strategic Imperative of ESG in Hospitality

The hospitality industry’s integration of Environmental, Social, and Governance (ESG) principles is no longer a choice; it is a necessity. As the world faces escalating climate challenges, socio-economic inequalities, and heightened demands for corporate accountability, ESG has become the standard by which businesses are judged. Hospitality leaders must understand not only the urgency of these global issues but also how ESG adoption directly influences their competitiveness, reputation, and financial success.

The global hospitality sector is uniquely vulnerable to climate and socio-economic disruptions. Climate change continues to increase the frequency of extreme weather events, directly impacting key tourism destinations and supply chains. Hurricanes in the Caribbean and rising temperatures in Mediterranean countries have disrupted seasonal tourism revenues, causing significant economic losses. Similarly, socio-economic instability in host communities can deter travellers, increase operational costs, and damage a property’s reputation. These risks, compounded by regulatory pressures and shifting consumer expectations, demand a proactive approach.

By embedding ESG principles into their operations, hospitality businesses can build resilience against these challenges. Proactive water management systems, for example, enable hotels operating in drought-prone areas to maintain operational efficiency while reducing resource dependency. Simultaneously, robust governance structures empower leaders to respond decisively to emerging challenges, ensuring business continuity and stakeholder confidence.

ESG is not just an ethical imperative; it is also a financial opportunity. Studies consistently show that businesses with strong ESG profiles outperform their peers financially. A 2022 MSCI report revealed that companies with robust ESG commitments experienced higher stock performance and reduced risk during periods of economic uncertainty. For hospitality businesses, this translates into tangible cost savings and revenue generation. Energy-efficient upgrades, such as installing LED lighting or upgrading to smart HVAC systems, can significantly reduce utility bills. Circular economy practices, like waste minimisation and the elimination of single-use plastics, often lead to savings in procurement and waste disposal costs. At the same time, sustainable branding attracts value-driven travellers willing to pay a premium for eco-conscious experiences.

The demand for ESG integration extends beyond guests to include investors, regulators, and employees. Institutional investors are increasingly directing capital toward companies with demonstrable ESG commitments, recognising that these businesses are better equipped to manage long-term risks and opportunities. Frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD) require businesses to report on their climate risks, with non-compliance potentially leading to reduced access to financing. Governments are also stepping up regulatory requirements. The European Union’s Corporate Sustainability Reporting Directive (CSRD), for instance, mandates transparent ESG disclosures in annual reports, with non-compliance risking financial penalties and reputational damage.

Employees, too, are becoming critical stakeholders in ESG. In a competitive labour market, particularly post-pandemic, job seekers increasingly choose employers whose values align with theirs. ESG-driven initiatives, such as diversity and inclusion programmes or ethical supply chain commitments, enhance a company’s appeal to top talent. For example, properties that prioritise fair labour practices and promote gender equality not only meet regulatory standards but also foster a culture of inclusivity and trust that attracts and retains high-calibre employees.

The cost of failing to embrace ESG is steep. Businesses that neglect sustainability risk alienating eco-conscious guests and losing credibility with investors. A lack of governance transparency can lead to regulatory fines, while unethical labour practices or social exploitation can spark public backlash, tarnishing a brand’s reputation. Incidents of greenwashing—where companies exaggerate their environmental credentials—have led to lawsuits and consumer boycotts. In 2022, several high-profile hospitality brands faced scrutiny for falsely advertising carbon offset programmes without evidence of actual reductions, resulting in significant reputational damage and loss of consumer trust.

Far from being a short-term trend, ESG represents a fundamental shift in how businesses operate. Hospitality leaders who embrace ESG early gain a competitive edge by differentiating their brands, building trust with stakeholders, and positioning themselves as pioneers in sustainable travel. Forward-thinking companies like Six Senses Resorts & Spas have successfully embedded ESG into their DNA. Their commitment to wellness, sustainable design, and community engagement has not only earned accolades but also established guest loyalty and a unique market position. Similarly, boutique hotels that champion local artisans and cultures create memorable experiences that resonate with value-driven travellers while contributing to the preservation of local heritage.

As the hospitality industry evolves, ESG is emerging as a critical determinant of success. It is more than a framework for addressing environmental and social challenges; it is a strategic tool for driving innovation, reducing risks, and creating long-term value. Hospitality leaders must act now to integrate ESG into their core operations, recognising its potential to shape the future of travel and tourism. By doing so, they can future proof their businesses, attract loyal customers, and contribute meaningfully to a more sustainable world.

Using This Book: A Guide for Leaders

The hospitality industry is undergoing a profound transformation, and Environmental, Social, and Governance (ESG) principles are at the heart of navigating this shift. This book is both a comprehensive guide and a practical toolkit, equipping leaders with the insights and strategies necessary to address the complexities of sustainable business operations while capitalising on emerging opportunities.

Whether you are a seasoned executive, an investor in the hospitality sector, or a newcomer to ESG, this book provides actionable strategies tailored to the industry’s unique challenges. By structuring the content for maximum clarity and usability, it ensures that you can immediately apply the concepts to real-world scenarios and drive meaningful change in your organisation.

The Structure of this Book

This book is divided into four distinct parts, each addressing a critical component of ESG within the hospitality industry:

Part I: Foundations of ESG in Hospitality
Gain a deep understanding of ESG principles, their evolution, and their application in the hospitality context. Learn why ESG is not just an ethical consideration but a business imperative that drives profitability and resilience.

Part II: Current Sustainability Trends in Hospitality
Explore what is working well and what is falling short in the industry. This section highlights innovative practices, emerging technologies, and the unintended consequences of poorly implemented strategies.

Part III: Practical ESG Implementation for Hospitality Leaders
Dive into strategies for integrating ESG into your operations. From energy efficiency and circular economy practices to social responsibility and governance excellence, this section provides a roadmap for transformation.

Part IV: Mastering ESG for Long-Term Success
Look to the future of ESG in hospitality with case studies from industry leaders and actionable strategies for maintaining competitive advantages. This section equips you to build an enduring ESG brand while adapting to evolving challenges and opportunities.

Written for a Broad Audience

This book is designed for a broad audience within the hospitality sector, including:

Hospitality Executives and Managers: Learn how to integrate ESG principles into your organisation’s strategy to create long-term value and operational efficiency.

Investors and Stakeholders: Understand the importance of ESG in assessing risk and identifying opportunities in the hospitality sector.

Hospitality Entrepreneurs: Discover how to build a sustainable business from the ground up, leveraging ESG to differentiate your brand and attract value-driven consumers.

Industry Professionals and Consultants: Access practical frameworks and detailed case studies to advise clients or organisations on best practices.

This book is structured to cater to both comprehensive and specific needs, making it adaptable to the challenges and goals of its readers.

For those seeking a holistic approach, reading the book in its entirety will provide a complete understanding of ESG and its intersection with hospitality. Each section builds on the previous one, creating a cohesive narrative that deepens your knowledge and inspires action.

For targeted insights, specific chapters address immediate challenges. For example:

Turn to Chapter 7 for guidance on reducing energy consumption.

Refer to Chapter 9 for implementing governance frameworks.

Explore Chapter 12 for real-world case studies of ESG leaders in hospitality.

For practical applications, each section concludes with clear recommendations to guide your implementation efforts, ensuring that the ideas presented are not just theoretical but directly applicable.

Key features of this book

Actionable Frameworks
From conducting ESG audits to building a transparent supply chain, this book provides tools and strategies to help you achieve measurable results.

Case Studies and Best Practices
Real-world examples illustrate successful ESG integration, showcasing how leading hospitality brands navigate challenges and achieve their goals.

Forward-Looking Insights
Gain a clear perspective on the future of ESG, including technological advancements, consumer behaviour trends, and regulatory changes.

The hospitality industry’s ability to lead in ESG is a pivotal factor in its resilience and relevance. This book is not just a guide—it is an invitation to lead. As you progress through the chapters, challenge yourself to think differently about your organisation’s impact, not only on profits but also on people and the planet.

The tools, insights, and strategies provided here are designed to inspire action. Whether you are just beginning your ESG journey or seeking to refine an existing approach, this book offers the roadmap you need to succeed in an era defined by sustainability and accountability.