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Understanding ESG landscape

In recent years, companies have faced various pressures and requirements to address climate and environmental impacts. These requirements increased sustainably due to the United Nation's Paris Agreement 2015, whose main objective is to maintain "the increase in global average temperature below 2° Celsius above pre-industrial levels." The Paris Agreement also includes an understanding to continue attempts "to limit the temperature increase to 1.5°Celsius above pre-industrial levels." Additionally, in 2015, United Nations member countries adopted the seventeen (17) Sustainable Development Goals (SDGs) as part of the agenda that provides a shared long-term plan for global peace and prosperity of sustainable development. The United Nations international agreements go hand in hand with the development of ESG reporting standards, such as the European Sustainability Reporting Standards (ESRS), the Global Reporting Initiative (GRI), Sustainability Accounting Standard Board (SASB) Standards, the International Sustainability Standards Board (ISSB), Task Force on Climate-related Financial Disclosures (TCFD) framework and the upcoming U.S. Securities and Exchange Commission (SEC) standards has made companies prepare to report based on this new regulatory framework. In recent years, ESG reports have become a practical and essential guide for companies to achieve better climate and sustainability results in the short, medium, and long term.

ESG's Impact on the Hospitality Industry

Environmental, social, and governance (ESG) topics have recently become relevant to the hospitality industry. As an integral part of the tourism sector, the hospitality industry is aware of the effects of climate change, global warming, and its impacts. According to Sustainable Travel International (2020), the carbon footprint of global tourism is nearly eight percent (8%) of the world's carbon emissions. Due to the considerations set forth above, hospitality companies recognize the need to operate and grow in a sustainable and responsible manner. Understanding the scope and criteria used in ESG has become crucial as more stakeholders and investors value sustainability commitments.

Importance of Human Capital

Considering the above, it is undeniable that the focus and investment in human talent with knowledge of the regulatory framework for ESG reporting and their ability to lead sustainability departments in companies plays a key role as a driver and facilitator of the success of the sustainable transformation of companies in the hospitality industry.

We seek to understand the state of the ESG agenda and its relationship that investors and other stakeholders use to evaluate a company's impact on the world. For this reason and based on McKibbon Hospitality’s guiding principle of "Do the Right Thing," our company appointed our first-ever Corporate Sustainability Manager, Rafael F. Ibarcena, to lead our path toward sustainable development. Rafael joined the McKibbon team in the summer of 2022 and brings a wealth of knowledge, having earned a Master of Science in Global Sustainability and a Master of Science in Entrepreneurship in Applied Technologies from the University of South Florida, as well as bachelor’s degree in industrial engineering and a master’s degree in business administration (MBA) from the University of Lima. Rafael holds over twenty-five years of work experience as a Business and Finance Executive and Consultant and is passionate about applying his academic and work experience to help people and organizations understand the importance of protecting the environment and positively impacting communities.

As part of his responsibilities, he is actively working with senior management, executives, employees and stakeholders, leading the design of the company's strategy and sustainability approach to minimize risks and seek opportunities related to climate change and the company's carbon footprint. Additionally, he oversees the overall execution, mission, and effectiveness of our sustainability program and department.

Understanding that the sustainability approach is transversal to the entire company, Rafael actively collaborates with each department and hotel manager to facilitate performance evaluations that are timely, constructive, and aligned with the standards of each hotel brand. Evaluating and analyzing company policies and processes from a sustainability perspective is essential to identify areas and processes where continuous improvements can be made within the organization. Sustainability professionals are responsible for proposing and implementing strategies to address various issues related to climate change, which include the rational use of energy and water resources, greenhouse gases (GHG) reduction, solid waste reduction, implementing and promoting recycling practices, propose certifications so that hotels are classified as sustainable and develop, together with the human resources department, training programs on sustainability practices. On the other hand, sustainability professionals must understand the different technological tools to collect data and thus develop an action plan for the conservation of natural resources and reduce the carbon footprint by minimizing the environmental impact. Additionally, sustainability professionals must be highly trained in global sustainability standards to prepare annual ESG reports. Moreover, sustainability professionals must be able to make presentations, proposals, and recommendations to the company's CEO, board of directors, and executives.

Aligning Business Strategy with ESG Strategy.

Sustainability executives must be able to demonstrate the benefits of running a business that is sustainable over the long term. A balanced strategy involving financial, commercial, environmental, and social topics is necessary to achieve these objectives. Leading the sustainability strategy involves creating a business culture that involves all levels of the organization, positively impacting stakeholders and where employees perceive their work as making a significant difference. Therefore, companies need to recruit talent to lead the sustainability strategy so that, together with the different executives from other departments, they can design a business strategy aligned with corporate values.

Conclusion:

Companies must be willing to generate a green culture, recruiting the necessary talent and integrating it transversally with the workforce at the corporate level to advance towards sustainability objectives. Consequently, the positive impact within the organization of sustainability professionals to achieve the company's sustainability goals takes on substantial relevance.

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