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3 key considerations for eco-conscious hospitality investors

3 key considerations for eco-conscious hospitality investors

Having an environmental, social and governance (ESG) strategy in place can ensure that both the business and its consumers work towards a greener future together

With climate change being the single biggest threat facing humanity, it’s no surprise that eco-consciousness has gained momentum over the past few years.

From changing our fashion choices to rethinking our diets and reducing single-use plastics, the world has been swept up in the green movement and there is no going back. But sustainability has become so much more than a personal choice – eco-consciousness is a key component for hospitality investors who want to ensure the longevity and prosperity of their business.

And while most hospitality businesses aren’t fully eco-friendly just yet, it’s important to take the steps and achieve this goal if you want to stand head and shoulders above competitors.

1. Is there an ESG framework in place?

An essential component a sustainable business should have in place is an environmental, social and governance (ESG) strategy. A responsible brand considers its impact on the environment and community around them – and how that could be improved – as opposed to ignoring these considerations. Making assumptions rather than taking an active read of what impact a franchise location has on its environment is not only irresponsible but damaging to the future of the planet.

Othman Shoukat, managing director at Creams Cafe, explains why: “Any business which is unwilling to understand its impact or rather is unwilling to communicate key ESG considerations to their consumers, will harm the overall sustainability of the hospitality sector. When a company provides the market with misleading information to help them seem more ecologically friendly – also called greenwashing – in fact, encourages consumers to choose a less sustainable option. Having a transparent corporate social responsibility (CSR) policy and sustainability framework in place, as we do at Creams, ensures everyone is on the same page – both the business and its consumer are working towards a greener future together.”

2. Is diversity celebrated?

A diverse brand is more likely to understand the wide range of its customers’ needs due to a larger variety of opinions and experiences within the team. There are around 5.6 million small and medium-sized enterprises (SMEs) in the UK, yet only 5 per cent of these are led by those in the ethnic minority – a statistic that proves although we have made strides in becoming more inclusive as a nation, there is still room for improvement.

“Our head office team is ethnically diverse (52 per cent non-white British or born outside the UK) and gender-balanced (57 per cent female) whilst our network of over 30 multi-unit franchise partners, also shares a similar diversity. This variety also means the whole workforce feels welcomed into the business no matter their gender, race or religion. This also provides us with diversity of thought,” points out Othman.

3. Is the key supply chain sustainable?

The supply chain is vital to consider when investing in a business in the hospitality sector. Does the business rely solely on suppliers for products and services and what could impact an interruption of supply? If the business has in-house production facilities, where are their base ingredients sourced from and what is their impact on the environment? These types of questions naturally come from both savvy investors and customers nowadays. From eco-friendly ingredients to making sure workers are paid fairly, the supply chain of a business – and how it impacts both social and natural environments – is a giveaway to how sustainable they are. Whilst most hospitality businesses aren’t fully eco-friendly or carbon negative just yet, it’s important a business takes steps to achieve this goal.

Andy Malthouse, construction director at Creams, shares what other steps a brand should take to consider its environmental impact and energy efficiency in his area of expertise – construction activities and materials. “It is well documented that construction negatively and significantly impacts the environment, but it’s all our responsibility to do whatever we can to reduce and where possible eliminate activities that impact our global environment,” he explains.

“As a business, Creams assess everything from energy efficiency to the materials we use in our fit-out process to ensure we select as many environmentally responsible alternatives as possible. This limits the amount of irreplaceable natural resources we use and reduces the number of resources that end up in landfill at the end of their use. As part of our continued commitment to ensuring our construction closely mirrors our sustainability values, we only allow shopfitting companies on our approved list who can demonstrate they have a genuine commitment and interest in reducing our carbon footprint.

“Currently, we are re-writing our works schedules to further reinforce these considerations, favouring more recycled products within the construction process, and determining how we can reduce energy consumption in the running of our restaurants. Any difference we can make will have a positive effect on not only the environment but also on our franchise partners’ ongoing running costs.”

There’s one more thing that budding entrepreneurs should consider – a brand’s investors. For example, in December 2020, Pistachio Holdings and co-investor Salonica Maroon acquired a majority stake in Creams.

“Salonica Maroon is a social impact fund with a focus to assuage societal ills by investing in diversity, promoting entrepreneurship among diverse communities, and actively inculcating diversity into executive management teams,” explains Othman. “We care about the future of our people and our planet. By having a key investor who shares our values, we generate a positive impact for our stakeholders including the communities where our restaurants operate. This doesn’t detract from us maximising financial returns and, in fact, good ESG policies enhance financial returns for shareholders.”

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