Green To Gold, for the Hospitality Industry

Their first pithy comment is "Smart companies seize competitive advantage through strategic management of environmental challenges." Company after company finds the business world is tied to the natural world. By ignoring how we depend on natural resources and their finite supply, we are killing the golden goose as we continue consuming as if there is no end. The hospitality industry may not see itself as generating problems like air and water pollution, but through its massive consumption patterns it is very much contributing to resource depletion which does contribute to pollution, which cannot be sustained indefinitely. From lessons learned by various companies who didn't think environmental issues would impact them, Esty and Winston share three lessons, lessons the hospitality industry needs to hear loud and clear.
1. Environmental issues can surprise the best of companies.
2. The environment can cost businesses real money -- it's not a fringe issue.
3. Seeing the world in a new light opens the door to real benefits.
Looking through an environmental lens is an essential business strategy in today's world. They boldly (and in my opinion, correctly) state no company can afford to ignore environmental issues -- not even the hospitality industry.

The first few chapters of this book highlight how environmental challenges have become an integral part of the business landscape. They introduce the Green Wave and how it's sweeping the business world and the present importance of making environmental thinking a core business strategy. Smart companies get ahead of the Green Wave to lower their financial and operating risk -- a step the hospitality industry could benefit from in today's challenging times.

Implementing environmental programs is done partially because it's the right thing. A benefit of doing the right thing is it attracts the best people -- employees, guests and vendors. You can't go wrong when you surround yourselves with the best people. The best people can help further your cause, improve your business and ultimately make you more money.

By folding environmental concerns into your myriad operational areas, your best people can:
- introduce products that help guests with their environmental problems, like guestrooms for chemically sensitive or allergy-prone people, creating a new eco-market space as a consequence.
- select suppliers who have strong environmental standards and encourage others to adopt environmental stewardship as their style
- measure your consumption so you can track your progress
- partner with others to learn about goal setting, incentives, training and tools so all employees are engaged in the vision

50 top WaveRiders (companies riding the Green Wave) are listed in the book. Not one of them is from the hospitality industry. Maybe that's because individually a hospitality business isn't large enough to make a perceptible difference, but as a combined group it's a huge force to be reckoned with, a force that could turn the Green Wave into a tsunami. Many Wave Riders voice opinions along the line of successful business and good citizenship are intertwined. It's past time for the hospitality industry as a whole to become a good citizen; there are lots of individual hospitality businesses that are.

The clear how-to advice and concrete examples, illustrated by companies like GE, WalMart, Toyota, Shell and BP, and Nike, are valuable even to the hospitality industry. Read how these companies, and others too, create strong brands, increase revenues, cut costs, reduce risk, and generate lasting value by building environmental thinking into their business strategies. These are the very things the hospitality industry can benefit from as well.

One note to make is that being green, or environmentally sensitive and active, isn't enough of an edge over the competition, but it's one important element in honing your competitive edge. The authors guide their readers through discussions of regulatory restrictions, resource shortages, and increasing pressure from customers and even stakeholders for companies to become more environmentally active and sustainable in their operations and attitudes. The discussion goes from talking about the problem through what you can do to take responsibility and how innovation and paradigm shifts need to take place before long-term changes can be attained.

But be aware that environmental initiatives can fail. Understanding why that happens will, according to the authors, help an environmental program thrive. The big failings in developing a thriving environmental program include:
* focusing on the wrong issues
* misunderstanding your marketplace
* not integrating environmental thinking into the workplace
* underestimating customer/guest reactions to green products (or services)
These issues are in addition to the usual short comings like poor planning, lack of commitment, and putting the wrong people in the key positions. According to Esty and Winston, "Environmental initiatives take no less work than other projects. And they fail just as often." Additionally they say, "sound environmental strategy can be very rewarding."

But even putting yourself on a sustainable path won't fix everything, not without a huge shift in approach. Even with being green, natural resources will be depleted and pollution will be caused by your company. And not all environmental investment or action will pay off, but by keeping an environmental focus you can keep your competitive edge.

One analogy from the book I especially appreciate is that of comparing our natural resources to our business assets. First Esty and Winston make the point that we live within nature's boundaries. Then they remind us some resources are renewable and some aren't, and those are being tapped daily. Can you imagine depleting your business assets without having even a plan to replenish them? That's what we are doing to nature's resources, depleting them without a plan to renew them or do something else when the resources are gone, or at least not cost effective to "mine" anymore.

I think resource depletion is the biggest flaw of the hospitality industry in regards to environmental abuse. Water and petroleum aren't the only natural resources hotels use extensively, though they are the biggies. Consider construction and decorating materials, and furnishings too. The hospitality industry may not directly cause pollution, but it contributes to it in other areas, the areas where their goods are made, and along the way to delivery. More care needs to be taken with the purchasing of goods to minimize resource depletion.

The authors identify ten environmental issues to watch because of the impact they can have on our lives. They list climate change, energy, water [resource sources and pollution], biodiversity and land use, chemicals and heavy metals, air pollution, waste management, ozone layer depletion, oceans and fisheries, and deforestation. By managing nature's bounty we will minimize our vulnerability to the changes we are facing. Draw upon your creativity to be innovative about ways you can run your business without depleting resources as fast, and maybe even help avoid that depletion. Esty and Winston go into detail about these resource issues, though mostly with industry in mind instead of hospitality. But the bottom line is the same: we all need to be more careful.

If you go along with the notion these ten environmental issues need to be watched, your next step is to realize you have up- and down-stream paths to observe and act on to make a difference to your industry. By conducting an audit of your role in these ten issues (the authors refer to this as an AUDIO analysis to reflect the elements of your audit: Aspects, Upstream, Downstream, Issues and Opportunities) you'll figure out what you can do to make a difference. You'll determine if it's time to either change vendors to those who are ahead of the curve and can help lead you to more environmental products, or give your present vendors the opportunity to comply with your new program. You'll see the changes you can make it your selections of furnishings and finishes. Even the relationship you have with your guests will take on a new tone as you make them partners in your green-to-gold play. You'll be able to start thinking about your role in the environment in a new way and create a program for your hospitality venue that will reduce your footprint on the planet. Being proactive will help you stay ahead of regulations that will come along.

I've long met resistance to my statement that the hospitality industry will be hit with regulations at some point, as have most other industries. Esty and Winston make a case for beating the competition on regulatory compliance. They talk about how it costs more to comply with regulations than most business leaders think. And most business leaders underestimate their capacity for innovation. I think that's particularly true in the hospitality industry. Using the AUDIO analysis as mentioned above, hospitality industry leaders will be able to figure out solutions. They might be cost-effective ways to beat the issue that will ultimately be regulated, or they'll be able to comply with existing regulations in way that cut costs, making them more competitive and give them an "Eco-Advantage". Cutting costs without cutting services or hospitality is a winning strategy for a hospitality business.

The next several chapters of the book lay out strategies for building an "Eco-Advantage". The authors guide the readers in developing their green-to-gold plays by managing the downside and building the upside. Managing the downside involves lowering your costs through improved resource productivity, cut environmental costs and regulatory burden, and lowering costs up and downstream, and by managing environmentally driven business risks. Building the upside involves building revenues through meeting your guests' environmental needs, positioning yourself to garner guest loyalty on your green attributes, and promoting your innovations and product breakthroughs, and harnessing your intangibles by building your corporate reputation, an intangible asset.

One issue briefly addressed in the book that applies to the hospitality industry is not to expect a price premium because you are developing a green program. Travelers around the world are cynical about why they are paying more for a green guestroom, for example, when the hotel is often saving money with the green actions. Esty and Winston point out that increasing your volume is a better way to increased profit than raising prices. Address the concern that being a green hotel will mean lowered quality and service and promote why that's not the case for you. Part of building guest loyalty is treating your guests well, and raising the price because you are green isn't a good move in building that loyalty.

As the authors proceed through their case for turning green to gold they present a few chapters on what various green businesses, WaveRidiers, do. Developing an "Eco-Advantage" mindset is the first step in your journey to being a successful green business. The steps outlined and discussed in the book are:

1. look at the forest, not the trees: look at the long-term for your business decisions, like one or two generations


2. start at the top: the commitment must start at the highest level for it to be a successful program


3. adopt the Apollo 13 principle -- "no" is not an option: give your green team seemingly impossible goals, ones that reflect an ambitious environmental vision, and then step back and let them innovate to make it happen


4. recognize that feelings are facts: understanding this reality is vital to getting into the right mindset to create your green program, your "Eco-Advantage"

Tracking your environmental impact is an important aspect of establishing your game plan. What's not measured won't change. Find out how big your environmental footprint is so you can know how much needs to change and to measure your successes along the way. Again, the authors give you a tool to guide your "eco-tracking", as they call it. Key environmental metrics include:

• energy: total used and renewable energy bought or used


• water: total used and water pollution


• air: greenhouse gas emissions, release of heavy metals and toxic chemicals, and emission of particulates


• waste: solid, recycled, and hazardous


• compliance: notices of violations and fines or paid penalites

Once you know what to track, figure out the places where you need to do the tracking. Consider tracking both relative and absolute metrics, like per dollar of sales and total tons of trash sent to landfills. Capture data at multiple levels within a company; the various chains throughout the world, and in different parts of each property. And capture this data both up- and down-stream. This data you are tracking will show you were you stand so you can make fact-based decisions. The sustainability discussed in this book as more of a journey than a destination, and these metrics let you know where the path is you are following.

Redesigning your world is another discussion in Green To Gold that might shake you up a bit. They bring in the book (see my Cradle to Cradle book review:, by William McDonough and Michael Braungart, because they want their readers to realize a paradigm shift needs to take place to make a true difference in the preservation of the planet and it's natural resources. The Cradle to Cradle authors argue that we need to look at environmental issues in a new way. They address why being "less bad" is no good and we need to develop new ways of thinking. Redesigning products and processes is the way to make real environmental gains. The hospitality industry is large enough it can make a huge impact in this area.

Cradle to Cradle urges people to go beyond reduce/reuse/recycle and add redesign and reimagine to their hierarchy of environmental action. Esty and Winston argue that innovation is critical to the 21st century competitive advantage. Just as it's cheaper to reduce than to reuse, recycle and throw things away, so it is more profitable to redesign and reimagine.

Several sustainability and environmental visionaries equate waste to food, based on nature's closed loop system. In the business loop, waste equals cost. That right there is the argument for rethinking hospitality operations. Reduce and recycle waste water, energy, bathroom amenities, newspapers, and food. Reuse materials as much as possible. Reduce air pollutants through the finishes and furnishings you select. These things are part of what reduces your environmental footprint and saves money.

Inspiring and creating an "Eco-Advantage" culture is an important step in the success of your environmental program. The book outlines the four basic culture-binding tools necessary for that effort.

1. have a vision, and have it reinforced by goals that stretch your team and staff, maybe even your guests


2. implement practices that fold environmental thinking into every strategic decision


3. create incentives for engaging people and making them accountable for the environmental agenda; encourage people to take ownership for the environmental strategy at an operational level, cross-fertilize your green team between operations and environmental positions, and establish incentives for environmental success based on the clear metrics you are getting


4. communicate with internal and external audiences; this step will really spur you to environmental action

Be careful to not "greenwash" any of your communications -- to staff, team or the public. Don't stretch the truth about what you are doing. Be up front about the efforts that didn't work, or aren't working yet. Being transparent in your communications is a powerful tool to get and keep people behind your efforts. The biggest disservice you can do to yourself and others following in your steps is to try to be something you aren't.

Finally, the last few chapters put it all together to cover why environmental initiatives fail, urging the readers to take action, and creating a strategy for an environmental program. Misunderstanding the market is a step toward failure. That goes both ways: if you don't understand how much your guests want you to be green, and you therefore ignore their wishes -- or worse yet, only pretend to cater to them -- you are set for failure. Just as bad is not understanding what green actions your guests want you to take. Remember, your guests don't want to have quality or service suffer, but they want green -- lodging, food, spas, golf and any other hospitality venue. Be sure to educate your guests as to why you are taking the green steps you are, and not taking others, and then be consistent in your actions. After that, give it to them their way.

Adopting a green action plan isn't enough for your success. Don't pitch only the green steps you are taking. Be sure to talk about the other benefits you have to offer your guests, tying your green actions in with them. Your green action plan is like eating right for better health and longevity; it may not eliminate every risk, but they both go a long way in making for a better life.

Solutions for making your green program a success are pointed to also. The authors remind everyone to walk before running. Start with pilot initiatives, go for the low hanging fruit -- the easy projects. Then take a systematic view of future green projects. Analyze the lifestyle consequences of each new green project so you know what will happen up- and down-stream. Finally, be careful with your forecasting.

And don't fail to tell your story. You'll get more success from your green program by telling your guests about your green steps; don't keep them a secret. Part of enacting a green program is education. Tell your staff and the public about your environmental initiatives. "Eco-Advantage" comes from taking action, and getting credit for it. This is often a huge failing of the hospitality industry. And this failure contributes to the public's cynicism about the little things they see some hotels, for example, do. Share your big picture to educate others about what you are doing and what they can do.

In the near future, no company will be positioned as an industrial leader or with sustainable profitability without factoring environmental issues into its strategy. With careful use of an environmental perspective the hospitality industry can reduce costs and risks. An environmental perspective can also drive upside gains, increase revenues and intangibles that are hard to measure, such as reputation. Green actions that can add real value are finding new market spaces, and servicing guest needs in new ways, while the business continues to do the right thing.

The economy and environment are deeply intertwined. Without careful stewardship, natural resource constraints will impinge on the hospitality industry and those companies that support it. Just as globalization and the internet impact the hospitality industry, so does the environment. An environmental strategy emerges as a critical point of competitive differentiation and success to the hospitality industry. Every company's financial future depends on integrated thinking on the part of the executives. By thinking differently, creating an "Eco-Advantage" mindset, understanding the environmental challenges facing it, and incorporating environmental stewardship into the corporate values and culture, the individual businesses incorporated into the hospitality industry will thrive.

In short, a green wave, a veritable tsunami, is sweeping the business world. It's propelled by two fundamental forces, according to Esty and Winston: environmental stresses, and people who are insisting business take action in response. Are you going to heed these two forces? Is the hospitality industry going to sink or swim?

Green to Gold is an eye opening book. It's well researched and presented. I wish Daniel C Esty and Andrew S Winston would write an article, if not a book, like this one specifically for the hospitality industry so specific examples of what works and what doesn't could be shared with hospitality industry leaders. But at the very least this article is a start in pointing to the value this book offers hospitality industry leaders who want to green their operations and the industry at large.