Restaurants, hotels, and entertainment are vital parts of our lives, and they have a critical role to play in the transition to a low-carbon economy. From the packaging of fast food to the energy used to power a casino, the hospitality industry’s contribution to global greenhouse gas (GHG) emissions can be considerable. It's crucial that businesses in this sector understand the key factors driving their carbon footprints, so they can decarbonize effectively. To establish a baseline picture of leading sources of emissions in hospitality, Persefoni analyzed data from the CDP (formerly Climate Disclosure Project), the largest global database of voluntary carbon reporting.
In this article, we’ll take a closer look at the emissions profile of the hospitality sector and outline the steps hospitality companies can take to begin calculating their carbon footprints — including identifying material emission sources and effectively engaging suppliers.
What is a Carbon Emissions Profile, and Why Does It Matter?
An emissions profile serves as an initial guide for carbon accounting.
One of the first steps in a carbon accounting journey is identifying which emission sources you need to track to accurately measure your footprint in line with industry best practices. An emissions profile helps answer this question by providing a snapshot of a sector or company’s GHG emissions, with details on material sources. It provides an initial guide that allows you to pinpoint the business activities contributing to your carbon footprint and understand the financial and operational data you’ll need to obtain for more comprehensive carbon accounting.
In this article, we’ll take a deep dive into the emissions profile of the hospitality sector.
The Hospitality Landscape
The sector is rapidly evolving in the face of global trends.
The hospitality industry encompasses a wide range of businesses, each with its own needs, challenges, and sustainability impacts. For the purposes of emissions tracking, the CDP has broken the industry down into two key subcategories:
- Bars, Hotels, and Restaurants
- Fast Food: This includes quick service restaurants that focus on convenience.
- Food and Beverage Amenities: These are non-fast food establishments including restaurants, cafes, and hotel food services, as well as catering services.
- Hotels: This large category encompasses hotels, motels, and time-share properties.
- Entertainment Facilities
- Gambling: Casinos, lottery services, and other gambling facilities comprise this category.
- Recreation and Entertainment: Businesses in the recreation and entertainment category include cinemas, amusement parks, galleries, and event ticketing.
Key Trends Affecting the Hospitality Sector
Within each of the subcategories listed above, major shifts are underway, with long-term impacts on the industry’s decarbonization trajectory. Hospitality companies were deeply affected by the COVID-19 pandemic, which brought a heightened focus on sanitizing and a preference for single-use items and individually packaged goods — a trend that has lingered. Meanwhile, consumer demand for sustainable packaging continues to increase. The growing popularity of food delivery services like DoorDash and Deliveroo is also rapidly transforming business models in the restaurant sector.
Risks from climate change are becoming more evident, too. Severe weather and disasters are disrupting supply chains and affecting the availability of certain food items. Some businesses in this sector rely heavily on natural resources — from agriculture for food to the wildlife and ecosystems that generate tourism.
In short, sustainability has become a pressing imperative. To minimize damage to land, water, and biodiversity, companies need to prioritize responsible sourcing of products and tackle waste management, which poses a persistent challenge throughout the supply chains of various businesses.
Several other global trends affect the industry:
- Climate Disclosure Regulations: Laws and regulations emerging from the European Union, California, the US Securities and Exchange Commission (SEC), and the many countries adopting standards set by the International Sustainability Standards Board will require certain businesses to provide audit-grade data about their emissions — or potentially face penalties.
- Carbon Pricing: As jurisdictions introduce carbon taxes or cap-and-trade systems, a complete picture of your emissions becomes essential for cost prediction. Carbon pricing trends vary regionally — not just nationally — making it critical for companies to understand their potential carbon costs.
- Changing Consumer Behavior: Modern consumers increasingly demand low-carbon or sustainable products. Their purchasing decisions reflect this preference, thereby influencing the marketplace.
- Stakeholder Concerns: Stakeholders, including investors and lenders, now often expect transparency about a company's environmental impact and make decisions based on ESG maturity.
- Upstream Supply Chain Impacts: Climate change can disrupt sourcing, especially if a company relies on goods from regions susceptible to changing weather patterns.
What are ‘Material’ Emissions in Hospitality?
Material emissions are significant to your overall carbon footprint.
Emissions are considered material if they make a significant contribution to a company’s total GHG emissions. In this context, ‘material’ refers to sources that account for at least 5% of total emissions in scope 1, 2, or 3 categories. Occasionally, emissions are regarded as material even when they contribute only a small percentage of the total footprint but are important for other reasons. For example, waste from restaurants is estimated to be under 1% of total emissions, but because of its influence on reputation and consumer choices, it demands attention.
Key Emissions Categories in Hospitality
Scope 1 and 2
Scope 1 and scope 2 cover direct emissions from owned or controlled sources and indirect emissions from the generation of purchased energy. For hospitality companies, this includes the energy used in food production and the operational demands of running accommodations.
Scope 3 Upstream
Purchased goods and services contribute to upstream scope 3 emissions. In the restaurant industry, emissions from the food products served can be substantial. Transportation of these goods is also a critical factor, especially for fresh deliveries.
Scope 3 Downstream
While traditionally less emphasized, this area is gaining attention with the rise of delivery services and the subsequent waste from packaging. For fast food and quick-service restaurants, franchising models can also add to the complexity of managing downstream scope 3 emissions.
Hospitality Emissions Profile
Electricity and purchased goods and services are key contributors.
For hospitality companies that report to the CDP, material emissions sources vary, but the most common sources are:
- Purchased Electricity: This is often a heavy contributor in hotel, restaurant, and entertainment facilities, and can be a relatively simple area in which to make reductions due to the increasing availability of clean energy.
- Purchased Goods and Services: A large category, this includes raw materials as well as supply chain emissions (scope 3) from goods and services procured to support daily operations. This category can be challenging to calculate and manage.
Other emission sources that can be material include:
- Capital Goods: Emissions from a company’s fixed assets, such as manufacturing equipment, can represent a substantial portion of the overall emissions profile.
- Upstream Transport and Distribution: These emissions come from transportation and logistics paid for by the reporting company.
- Fugitive Emissions: For hotels, restaurants, and entertainment facilities, fugitive refrigerant emissions from air conditioning units can be a substantial source.
- Stationary Combustion: On-site combustion of natural gas for restaurant heating and cooking and for heating units in hotels and recreational facilities is a source of material emissions.
- Mobile Combustion: Emissions from the company’s owned or leased vehicles contribute to its footprint.
- Purchased Heat, Steam, and Cooling: These emissions come from heat and steam purchased to power, heat, or cool facilities.
- Downstream Transportation & Distribution: This category is particularly relevant when delivery services are involved but is often under-reported.
- Employee Commuting: These emissions come from personal vehicles, public transit, motorbikes, rail, and ferry services used by company staff.
- Waste: Waste from operations is an indirect emissions source. This category can be material even when it contributes a small percentage to overall emissions since it is key to an organization’s reputation.
- Franchises: When a company has a franchise model (e.g., fast food restaurants), it will need to account for emissions from its franchise units.
- End-of-Life: The end-of-life treatment of sold products, including disposal and recycling of packaging and products from food services, is a significant consideration for many hospitality companies in the fast-food sector or serving food for off-premises consumption.
Key Differences in Sub-sectors
The hospitality industry’s subcategories — restaurants, hotels, and entertainment facilities — face different challenges when it comes to managing carbon:
- Restaurants: Scope 3 emissions are a significant source for food services companies, with purchased goods and services contributing an estimated 70% of emissions.
- Hotels and Lodging: Accommodation companies may see a larger proportion of their emissions in scopes 1 and 2, given their operational nature and energy use for heating, lighting, and water services.
- Entertainment: Like lodging, entertainment facilities generate substantial scope 1 and 2 emissions from on-site heating and cooling and purchased electricity. Scope 3 emissions are also important; particularly packaged goods and services.
What’s Next? Calculating and Managing Emissions
A guide to getting started on your carbon footprint journey.
For the hospitality industry, managing emissions can be complex and time-consuming, especially if you rely on carbon-intensive suppliers. If you’re calculating your footprint for the first time, we recommend you start by following these four steps:
1. Project Management
Assign a dedicated leader for carbon management and establish internal deadlines to keep the project on track. Regardless of whether you’re in food services, accommodations, or entertainment, you’ll need an Inventory Management Plan to ensure consistent reporting and accountability.
2. Material Source Assessment
Engage with stakeholders to review all potential emission sources and identify which are material to your operations. The industry emissions profile can serve as a guide for knowing where to start. For example, fresh food delivery services will likely want to look first at emissions from transportation, while hotels will want to prioritize energy used for heating the large volumes of water needed for showers and laundry.
3. Data Collection
Begin by identifying relevant data sources and owners, then establish clear data collection processes. You should focus on both easy-to-gather internal data and the more challenging task of engaging suppliers for upstream information. Each subsector will present its own challenges. Many fast-food companies, for example, will need emissions information from franchise units, while entertainment facilities will likely prioritize energy use data from utility bills and contracts. Don’t be put off, though — it is possible to use estimation techniques and extrapolation if data is challenging.
4. Supplier Engagement
For many in the hospitality industry, particularly in food services, supplier engagement will be a critical step. You can start by targeting a small number of suppliers who will make the biggest impact. Forming strong relationships with your suppliers early on will lead to more efficient and reliable scope 3 emissions calculations, which, in turn, leads to more effective decarbonization. The more you understand your suppliers’ operations and data management practices, the more you will be able to influence them and accelerate progress on your climate goals. Sharing the same carbon accounting platform can greatly facilitate communication and make data gathering a smoother process.
Data Requirements, Sources, and Owners
To start, it’s helpful to get a sense of the information you’ll need to collect for your comprehensive carbon footprint. Scope 1 and 2 data is usually easier to acquire because it comes from internal sources. Scope 3 data from suppliers can be much more complex.
The tables below show typical data requirements, sources, and owners for the hospitality sector — and can serve as a roadmap for aligning the information you seek with your organization's existing resources.
Scopes 1 & 2
Scope 3
Getting Started With Supply Chain Analysis
Prioritize hot spots, gather data, and communicate your findings.
Getting emissions information from your suppliers is a daunting task. We recommend taking a step-wise approach, targeting the data you can most easily obtain and focusing on your largest suppliers or those with the most significant impact.
Step 1: Prioritize suppliers. Identify high-impact suppliers who are critical to your scope 3 emissions. Start with suppliers who make up the lion’s share of your spending or who come from emission-intensive industries. A restaurant business may want to prioritize partners that supply meat or dairy, for example. Outline what you expect from your suppliers and how they stand to benefit from communicating their emissions data.
Step 2: Gather data. Carbon accounting technology will facilitate the gathering, monitoring, and verification of data within your supply chain — increasing transparency and eliminating miscalculations. For example, Persefoni’s free carbon software, Persefoni Pro, streamlines supply chain data collection, helping companies move away from spend-based estimates towards a higher percentage of reported data based on actual activity. The platform provides a single source of truth and cuts down on the need for back-and-forth — enhancing efficiency, lowering operating costs, and ultimately accelerating climate progress.
Step 3: Communicate your findings. Once data is verified, it’s time to assimilate it into your overall emissions profile and communicate your findings and insights with suppliers. Ideally, this will become an ongoing and recurrent activity resulting in continuous improvement and reductions.
Drive Change with Transparent, Traceable Carbon Data
The hospitality industry is under intense pressure from climate change. To minimize risk and stay competitive, restaurants, hotels, and entertainment facilities must adapt. Decarbonizing has become a pressing need, and companies need to start with a clear picture of where their emissions come from.
Given the complexity of emissions in this sector, it’s critical that companies establish a reliable system for carbon accounting early on. This is where technology comes in. Software like Persefoni not only ensures that your data is traceable, transparent, and reliable — it facilitates communication with your suppliers, ultimately saving time and money.
Ready to calculate your emissions? Learn more about our AI-powered carbon measurement & reporting platform.
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