Home / ESG in hospitality: a legal roadmap for hotel owners and operators
22nd August 2025
Darcy MacMillan, Solicitor
Environmental, Social and Governance (ESG) considerations are no longer just a reputational bonus in the hospitality industry – it’s a necessity. Despite the ongoing recovery from the pandemic, consumer interest in travel remains ever-growing and it’s vital for hotel owners and operators to embed ESG principles into their operations and development strategies. As ESG shifts from soft aspiration to hard obligation, hotel businesses must have a clear understanding of the fast-changing legal landscape and reflect this in their agreements and day-to-day operations.
The environmental pillar of ESG is a measure of how a business interacts with—and is impacted by—the natural world. For hotel owners and operators, this includes factors such as the company’s carbon footprint and its impact on biodiversity.
Hotel owners and operators will be familiar with standard sustainability initiatives like energy-efficient buildings, waste reduction and carbon offsetting. These efforts have become an essential part of hotel operations and brand positioning.
In recent years, it’s no longer enough to simply say you’re green. Regulators are holding businesses to the accuracy of their claims and hospitality companies must ensure that green certifications, advertising and reporting aligns with the relevant legal standards. This will ultimately avoid greenwashing risks that can lead to regulatory enforcement or litigation.
As a people-driven sector with large workforces and complex supply chains, hotels face increased scrutiny over how they treat their employees, where they source their goods and services and how they engage with their local communities.
With a stronger focus on increasing ethical recruitment, fair wages, and diversity, equity and inclusion (DEI), hotel owners and operators must ensure that their policies and agreements reflect these fast-evolving legal standards.
Governance is much more than board meetings and executive pay – it measures how a company operates in terms of leadership, executive pay, audits, and more. For investors, partners and other stakeholders, robust governance is a clear indicator of integrity, resilience and long-term value. Therefore, maintaining good governance means treating ESG as a core business priority.
In the hospitality sector, you should ensure that ESG is not siloed as a marketing function but is embedded into leadership, risk management and legal compliance. For hotel owners and operators, this should include:-
In today’s fast-evolving landscape, it is essential that hotel owners and operators to keep up to date with ESG developments. Failure to keep pace with legal developments may lead to reputational damage, loss of investor confidence and regulatory penalties.
Many investors and financial institutions recognise that ESG performance equates to better reputation and reduced financial risk. Consequently, companies that adopt clear ESG strategies can increase returns through long term growth.
Therefore, ESG credentials are no longer peripheral and rather, they are core components of commercial success and long-term resilience in the hospitality sector. By embedding ESG principles into the heart of your hotel agreements, you can strengthen resilience, protect brand integrity and stay competitive in a market that increasingly values purpose as much as performance.
Contributor, Sunny Kaur, Trainee Solicitor