Wasn’t me! Defining tourism sub-sector responsibilities for EU ESG reporting

How can the European Uni­on’s (EU) travel and hos­pit­al­ity sec­tors estab­lish clear respons­ib­il­ity bound­ar­ies while ensur­ing envir­on­ment­al, social, and gov­ernance (ESG) account­ab­il­ity across the entire tour­ism value chain? Robin Boustead shares his first “Good Tour­ism” Insight. 

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Looming deadlines, fines, (prison?)

We are rap­idly approach­ing the end of the first year of data gath­er­ing for com­pan­ies who must sub­mit ESG state­ments in 2025. In Janu­ary 2025, ana­lys­is and crit­ic­al decision mak­ing will ripple through large com­pan­ies across Europe, includ­ing those in travel and hospitality. 

For the last few months, I have had an almost con­stant flow of ques­tions from sus­tain­ab­il­ity and ESG pro­fes­sion­als largely focused on two issues: 

1. How to set impact bound­ar­ies; and 
2. The ideal com­plex­ity of scen­ario ana­lys­is.

The travel sec­tor plays a pivotal role in shap­ing sus­tain­able prac­tices giv­en its pro­found influ­ence on loc­al eco­nom­ies, com­munit­ies, and eco­sys­tems. There are many neg­at­ive and pos­it­ive impacts cre­ated by a highly com­plex industry of count­less SMEs through to very large busi­nesses. Estab­lish­ing clear respons­ib­il­ity bound­ar­ies when identi­fy­ing impacts, which are likely shared with oth­er sys­tem act­ors, is both vital and complicated.

European reg­u­la­tions have “raised the ante by intro­du­cing poten­tial fines and even pris­on time for directors”

Recent reg­u­la­tion of ESG report­ing in Europe through the Cor­por­ate Sus­tain­ab­il­ity Report­ing Dir­ect­ive (CSRD) has raised the ante by intro­du­cing poten­tial fines and even pris­on time for dir­ect­ors if reports are con­sidered to be delib­er­ately inac­cur­ate or mis­lead­ing. No won­der then that there is a great deal of anxi­ety and high expect­a­tion from the first release of ESG state­ments at the end of Q1 2025.

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Defining responsibility boundaries

Respons­ib­il­ity bound­ar­ies refer to the clear demarc­a­tion of roles and oblig­a­tions among stake­hold­ers in the tour­ism value chain, which includes air­lines, hotels, tour oper­at­ors, loc­al com­munit­ies, and gov­ern­ment agen­cies. Estab­lish­ing these bound­ar­ies is not easy:

1. Stake­hold­er map­ping and engage­ment: Organ­isa­tions need to con­duct com­pre­hens­ive stake­hold­er ana­lyses to identi­fy all parties involved in their value chains. This pro­cess needs to identi­fy neg­at­ive impacts, cat­egor­ise them, pri­or­it­ise them, determ­ine needs and depend­en­cies, and devel­op action plans that the value chain can man­age, min­im­ise, and trans­form into pos­it­ive scen­ari­os. For example, air­lines can focus on redu­cing car­bon emis­sions, while hotels can pri­or­it­ise energy and water effi­ciency as well as waste reduction.
2. Con­tracts and codes of con­duct: Clearly defined con­tracts and industry-wide codes of con­duct need to set expect­a­tions for ESG com­pli­ance. These agree­ments should include meas­ur­able tar­gets, such as green­house gas reduc­tion com­mit­ments or fair labour prac­tices, and hold parties account­able for achiev­ing them.
3. Sec­tor-spe­cif­ic frame­works: Devel­op­ing sec­tor-spe­cif­ic ESG frame­works tailored to the unique char­ac­ter­ist­ics of travel and hos­pit­al­ity is cru­cial, and the European Fin­an­cial Report­ing Advis­ory Group (EFRAG), for which I am a tech­nic­al advisor, has already begun this pro­cess for the CSRD. Addi­tion­ally, vol­un­tary stand­ards need to be adop­ted by SMEs if they want to align their oper­a­tions with lar­ger organ­isa­tions. In fact we are already see­ing major OTAs enga­ging with sus­tain­ab­il­ity cer­ti­fic­a­tion pro­grams in the hotel and tour oper­at­or sub-sectors. 

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Ensuring ESG accountability across the value chain

While defin­ing respons­ib­il­it­ies is essen­tial, ensur­ing account­ab­il­ity across the entire tour­ism value chain requires con­sist­ent mon­it­or­ing, report­ing, and, most essen­tially, col­lab­or­a­tion. This will be cru­cial in estim­at­ing and man­aging poten­tial impacts due to cli­mate change, biod­iversity loss, and human migra­tion in the years ahead. 

In their report­ing, busi­nesses must start includ­ing not only back­ward-look­ing fin­an­cials but also for­ward-look­ing anti­cip­a­tion of ESG-related risks and allow­ances for pre­vent­at­ive and remedi­al coun­ter­meas­ures. Busi­nesses should be pre­pared for and open to:

1. Trans­par­ent report­ing and met­rics: Stand­ard­ising ESG report­ing met­rics through the value chain allows stake­hold­ers to track pro­gress and identi­fy areas for improve­ment in a con­sist­ent and timely man­ner. Inter­op­er­able frame­works like the Glob­al Report­ing Ini­ti­at­ive (GRI), the Sus­tain­ab­il­ity Account­ing Stand­ards Board (SASB) and the European Sus­tain­ab­il­ity Report­ing Stand­ard (ESRS) provide guidelines for trans­par­ent disclosure.
2. Third-party audits and cer­ti­fic­a­tions: Inde­pend­ent audits and cer­ti­fic­a­tions, such as LEED or BREEAM for green build­ings are already estab­lished, but there are sig­ni­fic­ant gaps between Glob­al Sus­tain­able Tour­ism Coun­cil (GSTC) cer­ti­fic­a­tion and ESG report­ing stand­ards like GRI and ESRS that need to be addressed if we are to have mech­an­isms that build trust and cred­ib­il­ity among stake­hold­ers and consumers.
3. Tech­no­logy and data shar­ing: Lever­aging tech­no­logy to mon­it­or ESG impacts enables real-time track­ing and decision-mak­ing. Block­chain, for example, can enhance trans­par­ency in sup­ply chain man­age­ment, ensur­ing that mater­i­als and ser­vices meet sus­tain­ab­il­ity cri­ter­ia. And AI will cer­tainly play an increas­ingly import­ant role in under­stand­ing the com­plex­ity of biod­iversity impacts.
4. Capa­city build­ing and train­ing: Per­haps the most urgent ‘human ele­ment’ is provid­ing train­ing pro­grams for employ­ees and loc­al stake­hold­ers that foster an under­stand­ing of ESG prin­ciples, and equip them to imple­ment sus­tain­able prac­tices effectively.
5. Col­lab­or­at­ive ini­ti­at­ives: Cross-sec­tor col­lab­or­a­tions, such as part­ner­ships between gov­ern­ments, NGOs, and private enter­prises, need to address sys­tem­ic chal­lenges like cli­mate change and social inequit­ies. We need to see industry asso­ci­ations com­ing togeth­er to devel­op com­pre­hens­ive scen­ario and sens­it­iv­ity ana­lys­is plat­forms that can drive industry resi­li­ency. No one busi­ness can do this alone. It must be accom­plished through robust col­lab­or­a­tions, and include ini­ti­at­ives like the UN’s One Plan­et Net­work to facil­it­ate know­ledge shar­ing and col­lect­ive action.

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Balancing responsibility and accountability

Bal­an­cing respons­ib­il­ity bound­ar­ies with account­ab­il­ity requires a shared com­mit­ment to sus­tain­ab­il­ity while recog­nising the inter­de­pend­ence of stakeholders. 

To achieve this balance:

1. Adopt a sys­tems vis­ion and approach: View­ing the tour­ism value chain as an inter­con­nec­ted sys­tem that relies heav­ily on oth­er sec­tors like trans­port­a­tion, energy and con­struc­tion, high­lights the ripple effects of indi­vidu­al actions. Our sym­bi­ot­ic rela­tion­ship with biod­iversity and com­munit­ies, mit­ig­at­ing the neg­at­ive impacts that excess­ive exploit­a­tion has on them, must be our first pri­or­ity. Real, prac­tic­al meas­ures and not lip ser­vice are the order of the day.
2. Engage con­sumers: Edu­cat­ing trav­el­lers about their role in sus­tain­able tour­ism fosters respons­ible beha­viours, such as choos­ing eco-friendly accom­mod­a­tions or min­im­ising plastic use. We need to stop offer­ing ‘bad’ options, even if it means redu­cing trav­el­ler num­bers in some places.
3. Policy sup­port: Gov­ern­ments can play a crit­ic­al role by estab­lish­ing reg­u­la­tions and incent­ives that pro­mote ESG align­ment. Over 50% of the glob­al eco­nomy will be imple­ment­ing ESG report­ing stand­ards in 2025, and more are fol­low­ing. To encour­age broad adop­tion, we need tax breaks and invest­ment incent­ives for sus­tain­able prac­tices, or pen­al­ties for non-com­pli­ance to drive industry-wide adherence.

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Ultimate goal

The travel and hos­pit­al­ity sec­tors have a unique oppor­tun­ity to lead by example in achiev­ing ESG accountability. 

Firstly, we must face the fact that our sec­tor cre­ates too many neg­at­ive impacts. We have to fix that by estab­lish­ing clear respons­ib­il­ity bound­ar­ies through stake­hold­er engage­ment, con­trac­tu­al oblig­a­tions, and tailored frameworks. 

Find more by Robin Boustead

Secondly, after dec­ades of mediocre vol­un­tary sus­tain­ab­il­ity cer­ti­fic­a­tion uptake, we need robust account­ab­il­ity mech­an­isms with pun­it­ive pen­al­ties, genu­inely trans­par­ent report­ing, fully inde­pend­ent audit­ing, and tech­no­logy adop­tion that can track and enforce progress.

Our ulti­mate goal needs to com­bine a bal­anced and col­lab­or­at­ive approach that will enable the tour­ism value chain to thrive while pre­serving the plan­et and uplift­ing com­munit­ies for future generations.

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What do you think? 

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About the author

Robin Boustead has worked in sus­tain­able tour­ism for more than 30 years. Mr Boustead is a seni­or tech­nic­al advisor to European Fin­an­cial Report­ing Advis­ory Group (EFRAG), con­sult­ant to gov­ern­ments and busi­nesses about sus­tain­able strategy and stand­ards imple­ment­a­tion, and cre­at­or of the Great Him­alaya Trail in Nepal. He is also author of mul­tiple books and research papers, includ­ing the ESG Report­ing Manu­al.

Featured pic (top of post)

“Delib­er­ately inac­cur­ate or mis­lead­ing” tour­ism ESG report­ing might land dir­ect­ors in pris­on. Pris­on bars image by Craig Clark (CC0) via Pixabay. Jungle path back­ground image by Sas­in Tip­chai (CC0) from Pixabay.

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