Reporting in line with the EU

Corporate Sustainability Reporting

Directive (CSRD)
Recommendations for the hospitality industry

This guidance is designed for hotel companies looking to report on their sustainability in
line with the new EU legislation.

Contents
1.0 Introduction…………………………………………………………………………………………..2
2.0 Background on the CSRD requirements..………………………………………………………..2
What are the current and new requirements?.………….……………………………………………..2
Does my company fall within the scope of the criteria?..……………………………………………..2
When do I need to report? ……….……………………….……………………………………………..3
What disclosures need to be made?.……………………………………….…………………………..3
What is double materiality? ………………………………………………….…………………………..3
Example of how impacts and dependencies can interact with one another………………………..4
Is there a requirement for independent assurance? ………………………………………...………..4
3.0 Impact materiality assessments……………………….………….……………………………….4
4.0 Recommended steps……………………………………………………………………………….5
5.0 Tips for best practice………………………………………………………………………………..6
6.0 Further reading and resources…………………………………………………………………….7

Appendix A: European Sustainability Reporting Standards (ESRS).……………………………….….8

Appendix B: Example of a materiality assessment mapping process……………………………......10
Appendix C: Example of a social impact assessment……………………………………….…………12

Sustainable Hospitality Alliance is a registered charity in England and Wales (1188731)

1 Company limited by guarantee (12373950)
1.0 Introduction

The EU Corporate Sustainability Reporting Directive (CSRD) is here to stay, and EU and non-EU hospitality
companies must consider how the directive applies to them, including timelines, scope and reporting
requirements. This is a tremendous opportunity for the hospitality sector to improve and work towards Net
Positive impact. This guidance is intended to help hospitality companies address frequently asked questions
and consider some steps to prepare for mandatory and robust reporting.

2.0 Background on the CSRD requirements

What are the current and new requirements?

The EU Corporate Sustainability Reporting Directive (CSRD) replaces the existing Non-financial Reporting
Directive (NFRD) and establishes wider ESG reporting requirements within a distinct section for the
management report.

To comply with CSRD, companies will be required to report according to the European Sustainability
Reporting Standards (ESRS) to prepare their ESG disclosure information.

In addition, the Corporate Social Due Diligence Directive (CSDDD) is also under development. CSDDD
complements CSRD as it focuses on corporate action. CSDDD sets out due diligence actions required to
identify, mitigate and remedy adverse impacts of a business, especially across value chains within and
outside Europe. A draft of the CSDDD was released on 1st June 2023, with the final text to be approved by
early 2024.

2021 2022 2023 2024 2025 2026 2027 2028

NFRD
EU Taxonomy
Corporate Sustainability Reporting Directive
Corporate Social Due Diligence Directive

Does my company fall within the scope of the criteria?

The CSRD sets out criteria to determine who is within scope to comply with this legislation, and when. Even
if it is not yet mandatory for your business, it can be advantageous to report in line with CSRD
recommendations as it is likely that provision of capital by banks and investors may increasingly become
linked to compliance with CSRD reporting. In addition, even if your business is not directly in scope, your
supply chain is likely to be impacted.

Criteria A: Large EU Companies in scope

Any two of the three criteria are met:
1. Total assets exceed EUR 20M
2. Annual revenue exceeds EUR 40M
3. Employees over 250

Criteria B: Small and medium companies in scope

Small companies are defined as: Medium companies are defined as:
1. Less than EUR 10 million annual turnover and/or 4. Less than EUR 43 million balance sheet total
balance sheet total 5. Less than EUR 50 million net turnover
2. Employees between 10-49 6. Employees between 50-249
3. Listed on the EU regulated exchange 7. Listed on the EU regulated exchange

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Criteria C: Third-country non-EU Companies in scope
Annual revenue over EUR 150M in two most recent years and one of the two criteria is met:
1. An EU subsidiary meets the above criteria
2. EU branch with EUR 40M in revenue

When do I need to report?

Timelines for entity type Financial year Reporting year
Entities already subject to NFRD 2024 2025
Large entities not currently subject to NFRD, meeting criteria A 2025 2026
Small / medium entities listed on EU regulated exchange, meeting criteria B 2026 2027
Third-country undertakings, meeting criteria C 2028 2029

What disclosures need to be made?

CSRD requires reporting on company governance, strategy, impact, risk, opportunity, as well as metrics and
targets.

CSRD requires companies to disclose on a range of metrics across their environmental, social and
governance practices. These areas are set out in the newly released ESRS standards (see Appendix A).
The ESRS are broken down into 4 categories:

1. General disclosures
2. Environmental
3. Social
4. Governance

Topics under categories 2-4 only need to be reported on if they are deemed “material” to a business. When
assessing whether a topic is material, a double materiality assessment will be required. The reporting
boundary will need to be expanded to include the entire value chain, covering the full life cycle of products
from production to disposal.

What is double materiality?

CSRD mandates that materiality be assessed through a double lens, considering both the impacts and
dependencies of the business on people and environment where it operates (‘impact materiality), as well as
external impacts and dependencies on the business and its financials (‘financial materiality’).

Impacts of the business on external environment

Hotel Planet &

business society

External impacts on the business

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Impact materiality includes how the hotel affects the environment and people in its own operations and
across its value chain.
• It includes the hotel’s actual or potential effect on people and the environment, including positive and
negative effects over a short-, medium- and long-term horizon.

• Here materiality is based on severity, which includes: scale, scope, irreversibility of impact and
likelihood of impact.
Financial materiality is the effect of external sustainability factors on a hotel’s position, including cash flows,
development, performance, position, access to finance.

• Here materiality is based on risks and the likelihood of occurrence and severity of potential financial
effects.

In this context, ‘impacts and dependencies’ include things which are:

• Actual and potential.
• Positive and negative (‘opportunities’ or ‘risks’).
• Short-, medium- and long-term.
• Things directly related to the business, as well as to its full value chain (e.g. supply chain,
customers, users).

Example of how impacts and dependencies can interact with one another

2. Impact: High water usage in hotel contributes to

water scarcity in the local community.

3. Local families spend

1. Hotel consumes Local
Hotel X more time collecting
lots of water through
community water and farmers
its operations.
produce lower yield than
usual .

4. Dependency: Shortage in locally sourced produce

available to the hotel, affecting daily operations.

Is there a requirement for independent assurance?

From the first year a company will be required to obtain limited assurance based on documents reviewed by
auditors on compliance with the ESRS, the underlying materiality assessment process and some reported
metrics. In the future if approved by the European Commission assurance may move towards reasonable
assurance, which is based on auditor visits to operations and value chain to verify document information.

3.0 Impact materiality assessments

Impact materiality assessments are used to understand how external factors could impact the business, as
well as the effects of your business on the wider environment and society. Lots of guidance exists to support
companies with conducting materiality assessments.

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Where materiality assessment will help your business identify ESG topics that matter the most, social impact
assessment will identify positive and negative impact of business activities on people, environment and
communities. By doing so you can better understand and plan to reduce harm and increase positive impact.

Appendix B gives an example of a possible approach to conducting impact materiality assessments in line
with ESRS topics.

Carrying out a social impact assessment

Social impact assessment (which includes impact on employees at the hotel, those in value chain,
customers, and the wider community where a hotel is operating) may seem like an impossible task as often it
is thought the impact data cannot be quantified. However, that is not the case. The qualitative data may be
collected from a representative sample and codified for quantitative weightage, ready for analysis. Please
see below guidance on how to assess social impact of hotels on people and communities:
1. Identify hotel or value chain activities that are related to ESRS standards (see Appendix A).
2. Identify who is most likely to be impacted by your business and ESG activities.
3. Develop questions to assess economic, social and emotional impact on people.

Activities Who is impacted Impact

Employment of staff Own employees

Agency workers
Workers from outsourced Economic: earnings, savings, resilience against shocks
Engagement with services (e.g. health, economic, natural disaster)
local businesses
Workers in direct supply
chain (goods) Social: difference in relationship with family and friends,
difference in relationships within own community, new
Training & Trainees / apprentices at your relationships beyond own community.
apprenticeship property
Individuals or families directly Emotional: change in sense of own wellbeing, change
Community projects in ambition / goals, change in ability to deal with stress.
participating in projects
Local community
Waste management Workers from outsourced
services

Appendix C contains an example of a social impact assessment.

4.0 Recommended steps

1. Identify which areas count as material

• Perform an impact materiality assessment to identify relevant ESRS topics to report on (see
Appendix B for an example of a possible approach).
• Engage all relevant departments, as well as external experts where necessary, to help work out
what areas should be shortlisted.
• Ensure thorough assessment of environment, social, and governance topics across the value
chain (corporate office, hotels, outsourced services, and supply chain).
• Identify and address gaps between the ESRS requirements and the information you currently
have available.
• Team responsible: ESG or CSR leads, Heads of Departments, and/or General Manager

2. Gather data for material topics

• Collect relevant data for material topics.
• Prepare for and obtain limited assurance.

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 • Team responsible: ESG or CSR leads

3. Gather information on the financial risks and opportunities of material topics

• Collect relevant data for material topics.
• See reporting in line with TCFD for example guidance on how to carry out financial reporting.
• Team responsible: ESG or CSR leads, Finance team, legal team or council

4. Carry out due diligence

• Prepare for CSDDD by piloting the process and measuring results at the earliest possible
convenience.
• Carry out due diligence on human and labour rights, and environmental considerations in own
operations, subsidiaries and across direct suppliers of services (such as cleaning, gardening,
security) and goods.
• Prioritise segments of the supply chain that are at high risk for human and labour rights (some
services, such as labour recruiters, employment agencies, and where there are migrant workers;
and goods such as rice, tea, cotton produced in countries with weak human rights regulations),
and include in the due diligence process as early as possible.
• Due diligence should focus on identifying, bringing to an end, preventing, and mitigating for
negative impacts, and providing remediation for identified adverse impacts.
• Monitor effectiveness of the due diligence policies, processes, and measures.
• Team responsible: ESG with procurement leads

5.0 Tips for best practice

Early preparation is highly recommended as several challenges may be faced when companies move
towards mandatory sustainability disclosures. Some things to consider for hospitality companies include:

• Don’t overcomplicate. The legislation can feel overwhelming, and it is easy to create more work
than is necessary.

• Ensure you have set aside time and resources. This may be required where data processes,
systems and controls may not already exist, and capacity building and training of both corporate
office and hotel staff for upgraded processes is needed.

• Invest in data quality, availability, and volume. Data quality and transparency may be currently
limited especially across business partners and suppliers in the value chain. They will need to
perform assurance procedures, some for the first time, and prepare datasets in line with CSRD with
evidence available to support disclosures made.

• Engage internal and external stakeholders in a more robust and thorough process, including
those who have not participated before. Stakeholders may include owners, franchisees, labour
recruiters, employment agencies, service providers, supply chain businesses, civil society
organisations, and those negatively impacted or their legitimate representatives.

• Review procurement processes and supplier contracts (existing and new). These may need
review for compliance standards, code of conduct, and include potential social audits by the
hotel/brand company or external party.

• Check technology solutions to manage data and data safety. It may not be possible to use a
single technology product to collect all data, especially data related to migrant workers, service
providers, or workers in supply chain businesses. Appropriate apps that can link into business
management systems may need to be identified and tested for API connection into existing hotel
systems.

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 • Be mindful of the audience you are reporting to. Think about what audience the information is
aimed at, for example, investors, corporate customers, or other major stakeholders. Keep this in
mind when preparing your reporting.

6.0 Further reading and resources

• European Commission: Corporate sustainability reporting

• EFRAG: First Set of draft ESRS – includes downloads of detailed documents for each
ESRS

• ESG Exchange – organisation hosting regular free webinars on CSRD and producing
guidance for businesses

• pwc: CSRD - Double Materiality Assessment

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Appendix A: European Sustainability Reporting Standards (ESRS)

Topical Sustainability matters covered in topical ESRS

ESRS Topic Sub-topic Sub-sub-topics (where provided)
ESRS E1 Climate Climate change adaptation
Change* Climate change mitigation
Energy
ESRS E2 Pollution Pollution of air
Pollution of water
Pollution of soil
Pollution of living organisms
and food resources
Substances of concern
Substances of very high
concern
ESRS E3 Water and Water withdrawals
marine Water consumption
resources Water use
Water discharges in water
bodies and the oceans
Habitat degradation and
intensity of pressure on
marine resources
ESRS E4 Biodiversity Direct impact drivers of Climate Change
and biodiversity loss Land-use change
ecosystems Direct exploitation
Invasive alien species
Pollution
Others
Impacts on the state of Examples:
species • Species population size
• Species global extinction risk
Impacts on the extent and Examples:
condition of ecosystems • Land degradation
• Desertification
• Soil sealing
Impacts and dependencies on
ecosystem services
ESRS E5 Circular Resources inflows, including
economy resource use
Resource outflows related to
products and services
Waste
ESRS S1 Own Working conditions Secure employment
workforce Working time
Adequate wages
Social dialogue
Freedom of association
Collective bargaining
Work-life balance
Health and safety
Equal treatment and Gender equality and equal pay
opportunities for all Training and skills development
Employment and inclusion of persons with disabilities
Measures against violence and harassment in the
workplace
Diversity
Other work-related rights Child labour
Forced labour
Adequate housing
Privacy
ESRS S2 Workers in Working conditions Secure employment
the value Working time
chain Adequate wages

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 Social dialogue
Freedom of association
Collective bargaining
Work-life balance
Health and safety
Equal treatment and Gender equality and equal pay
opportunities for all Training and skills development
Employment and inclusion of persons with disabilities
Measures against violence and harassment in the
workplace
Diversity
Other work-related rights Child labour
Forced labour
Adequate housing
Water and sanitation
Privacy
ESRS S3 Affected Communities’ economic, Land-related impacts
communities social and cultural rights Security-related impacts
Adequate housing
Adequate food
Water and sanitation
Rights of indigenous peoples Free, prior and informed consent
Self-determination
Cultural rights
ESRS S4 Consumers Information-related impacts for Privacy
and end- consumers and/or end-users Access to (quality) information
users
Personal safety of consumers Health and safety
and/or end-users Security of a person
Protection of children
Social inclusion of consumers Non-discrimination
and/or end-users Access to products and services
Responsible marketing practices
ESRS G1 Business Corporate culture
Conduct Protection of whistle-blowers
Animal welfare
Political engagement and
lobbying activities
Management of relationships
with suppliers including
payment practices
Corruption and bribery Prevention and detection including training
Incidents

* Companies must disclose on all of ESRS E1 regardless of materiality assessment outcome.

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Appendix B: Example of a materiality assessment mapping process

Topic ESRS Topic Sub-topic Example of impact of the business / impact on the Areas of a hotel business this sub-topic
business* might apply to
ESRS E1 Climate Change Energy Use of electricity from non-renewable resources • Lighting
• Impact of: carbon emissions to atmosphere. • HVAC systems
• Impact on: financial impacts of inflated prices during • F&B
energy shortages; reputational damage resulting in fewer • Petrol or diesel cars or shuttles
customers.
ESRS E3 Water and marine Water use Use of water in operations • F&B
resources • Impact of: depletion of resources; damage to local • Housekeeping
communities and ecosystems. • Guest rooms
• Impact on: financial impacts caused by disrupted • Spas and swimming pools
operations during water shortages.
ESRS E4 Biodiversity and Impacts and Recreational opportunities • Hotel grounds and surrounding areas
ecosystems dependencies on • Impact of: damage to local habitats and ecosystems • Tour or activity offerings in the local area
ecosystem services through construction, pollution, etc. • Procurement
• Impact on: financial impacts as a result of reduced • F&B
desirability of destination
ESRS E5 Circular economy Waste Generation of non-recyclable waste • F&B
• Impact of: risk of pollution caused by improper disposal • Procurement
on or off-site • Housekeeping
• Impact on: financial impacts as a result of reduced • Guest rooms
desirability of destination • Construction during renovation / new-
builds
ESRS S1 Own workforce Working conditions Staff contracts based on minimum standards where there are • Human Resources
weak local labour regulations • Hiring managers
• Impact of: labour rights exploitation • Legal
• Impact on: financial impacts as a result of low job
applicants and high turnover
Equal treatment and Low-skilled workers in entry level positions without support for • Human Resources
opportunities for all equitable opportunities • Hiring managers
• Impact of: labour exploitation and exclusion • Communications
• Impact on: financial impacts as a result of losing or not
attracting talent

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10 Company limited by guarantee (12373950)
 Other work-related Migrant workers • Human Resources
rights • Impact of: unethical recruitment practices • Procurement
• Impact on: financial and reputational impact as a result of • Housekeeping
legal cases • Outsourced services (e.g. laundry,
security)
• Legal
• Communications
ESRS S2 Workers in the Working conditions Supplier due diligence • Procurement
value chain • Impact of: earning below living wage with excessive • Housekeeping
hours • Laundry
• Impact on: financial impact as a result of low customer • Kitchen
confidence • Landscaping
Equal treatment and Use of local suppliers • F&B
opportunities for all • Impact of: exclusion of diverse suppliers and SMEs • Sales
• Impact on: financial impact as a result of unmet customer • Construction during renovation / new-
preference builds
Other work-related Supplier audits
rights • Impact of: use of child labour
• Impact on: finance and reputational impacts as a result of
negative press
ESRS S3 Affected Communities’ Waste disposal to landfill • F&B
communities economic, social and • Impact of: lower quality of life and economic opportunity • Procurement
cultural rights • Impact on: financial impacts as a result of reduced • Housekeeping
desirability of destination • Guest rooms
• Construction during renovation / new-
builds
ESRS S4 Consumers and Information-related Certifications for operations • Procurement
end-users impacts for • Impact of: mis-information to customers • Legal
consumers and/or • Impact on: financial and reputational impact for • Communications
end-users greenwashing
*Refer to diagram on p3 for further guidance on impacts of vs. impacts on

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Appendix C: Example of a social impact assessment

Sustainability is one of Aroosh Hotels’ basic principles during procurement. A basic sustainability
screening on environment, anti-corruption, human and labour rights, and non-discrimination is
carried out for each procurement project. All suppliers that pass the selection process undertake to
adhere to the principles in Aroosh’s Code of Conduct for Suppliers.

Aroosh sees social impact assessment as an opportunity to determine a baseline. The baseline
data will help Aroosh to engage the supplier in discussion on potential areas for future
improvement and measure progress. They also want to identify potential follow-up actions related
to service provider’s labour practices and opportunities within their own CSR programme.

Social impact assessment by Aroosh Hotels

1. Identify hotel or value chain activities that are related to ESRS S1-4:
Several services are outsourced by Aroosh hotels, including housekeeping, security, and
maintenance of green areas. The service providers’ employees work at the hotel premises regularly
but are managed by their employer, including allocation of shifts, compensation, and benefits. The
hotel has no direct control over working conditions except workplace safety while working at the
hotel premises.

2. Identify who is most likely to be impacted by your business and ESG activities.
Employees of the outsourced service providers.

3. Develop questions to assess economic, social and emotional impact on people.

Social impact assessment via employee survey for outsourced service provider workers (ESRS - S2 Workers in
the value chain).
To be completed by workers on hotel premises and used in 1-1 interviews with a sample group.
Scoring 2 1 0 Follow up notes
Economic wellbeing
Earnings
Check against local
1 How much do you earn per day/week of work? (in local currency)
living wage
Check shift hours of
2 Are you compensated for all the overtime hours? Always Sometimes No workers in outsourced
services
Saving
How often are you able to save from your
3 Monthly Sometimes None
earnings:
4 Are you the only earner in your family? No Yes
Resilience
Do you get medical support from your employer If low score raise
5 which you can access when you or your family Yes No concern with service
need? provider and consider
If there is an emergency, are you able to ask for exploring a
6 Employer Family/Neighbour No one collaborative solution
support from your:
7 Do your children go to school? Yes No

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 If you need support for your children's education, If low score, consider
8 Yes No
is your employer able to support? targeted CSR activity
Social wellbeing
Family
Do you feel your family &/or friends support you in Explore reasons given
9 Yes No to understand good
your current employment?
practices and what
10 Describe why they do/do not support you: may need
improvement
Community
Check if workers are
Do you feel you have a community or a group you from a predominantly
11 can engage with during times of celebration or Yes No dis-included or
distress? minority group, (e.g.
refugees, immigrants,
people with
disabilities,
If yes, name or describe group(s) you feel a part
12 ethnic/racial/religious
of: minority, survivors of
trafficking)
Wider relationships
Since you have been working at Aroosh Hotels, If low, check training
13 have you formed any new relationships beyond Yes No and career
your family / community / group? progression
opportunities provided
by employer; consider
Share some examples of new relationships you support through staff
14 have formed since you have been working at the skills-based
hotel: volunteering or
access to company
training programme
Emotional wellbeing
Own wellbeing
Has your perception of your own wellbeing
15 Yes No If low score, consider
changed since you started working at our hotel?
exploring further to
16 If yes, how has it changed? Better Worse find underlying
causes.
17 Describe some of the changes:
Goals & ambition
Has your goal or ambition for yourself changed
18 Yes No Check against training
recently (past 1-2 years)?
or career progression
If yes, describe what has changed / If no, what has opportunities
19
not changed:
Emotional resilience
Do you feel you are able to deal with stress when If low, consider
20 Yes Sometimes No
something doesn't go well? exploring further to
Give an example of a stressful situation and how find underlying
21 causes
you managed it:

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