Director of Group Sustainable Development Jane Ashton explains how TUI GROUP sees the business case for sustainable tourism.

Being more sustainable supports the long-term success of our business. It’s as simple as that. Which is not to say that sustainable tourism is straightforward or that we have everything worked out – we certainly recognise we have a long way to go and there are challenges involved. But the potential benefits are significant:

•     The opportunity to be recognised as a leader by investors
•     Better risk management and being ready for forthcoming legislation
•     Meeting growing customer demand and the related potential competitive advantages
•     Reducing costs
•     Colleague recruitment and satisfaction
•     Protecting destinations
•     Improving our product

These benefits cut across almost every aspect of our business and that’s why I am convinced everyone at TUI GROUP can find a reason to support our sustainability strategy. In fact I am pleased to say the business case is already being recognised and embraced across the Group. When we asked our businesses in a recent internal survey, 92% of them confirmed they were already implementing sustainable tourism strategiesi (73% in 2008/09). In many of those businesses, sustainability is embedded in business processes, supplier standards and performance measures. So it’s part of how we operate as a business, how we ask our suppliers to operate, and how we measure our success.

This would not be true if there were not a clear business case for sustainability at both a Group and an individual business unit level.

Investor interest

As a UK-listed company, there are legal requirements for disclosure and transparency with respect to our social and environmental impacts and actions. There are also many voluntary stakeholder requests too.

Voluntary investor-backed indices such as the Carbon Disclosure Project, the Dow Jones Sustainability Index and the FTSE4Good Index demand on an annual basis rigorous analysis and proof that a company is taking its responsibilities seriously. With Socially Responsible Investment (SRI) growing significantly over recent years (a 20% increase in the UK between 2007 and 2009), it makes commercial sense for TUI GROUP to seek to operate to best practice sustainability standards – and to out-perform our industry peers. And beyond the SRI sector, generalist investors are increasingly incorporating sustainability criteria into their analyses of companies.

Managing risks and meeting legislative requirements

The management of risk in sustainability ‘future-proofs’ the business in advance of forthcoming legislation, of which there is plenty. The UK Coalition Government is due to report on plans to strengthen companies’ reporting requirements in the coming months. Then there is the UK’s Climate Change Act, obliging the Government to introduce greenhouse gas disclosure legislation by April 2012. Carbon-related taxes across Europe and indeed worldwide are scheduled to increase over coming years too.

The EU Emissions Trading Scheme comes into force in 2012 and the fact that we are operating some of Europe’s most fuel efficient airlines will stand us in good stead competitively. As well as enhancing corporate reputation, encouraging investment and exceeding legal compliance, efforts to drive more sustainable business reap benefits at an individual business level too.

Growing customer interest – opportunity for competitive advantage

Today’s customer needs and demands are changing. Our recent research of 4,000 holiday makers in eight major TUI GROUP markets revealed that one in two would book a more sustainable holiday if it were readily available; two in three would change their behaviour on holiday if it helped the environment; and two in three also want their holiday company to be clearer about what it does to make its holidays more sustainable.

These findings show a clear aspiration for more sustainable holidays on a significant scale. The exponential growth in fair trade and locally sourced goods in recent years is proof that consumers will indeed purchase more sustainably when the option to do so is easy, affordable and well communicated.

Three-quarters of TUI GROUP businesses are now highlighting greener, fairer holidays to customersi. The majority adopt Travelife standards, an industry-wide system that supports and recognises hotels which care for the environment, their employees and the destination community. Indeed, TUI UK has set a target for 90% of its hotels to be Travelife-awarded by 2014. This makes sense for us because it aligns closely with TUI GROUP’s commercial strategy of differentiating its product portfolio. There is also evidence that our most sustainably-managed hotels are also those which are delivering higher quality and customer satisfaction. Our research shows that 85% of customers who stayed in a Travelife-awarded hotel rated it more highly than the average hotels.

Reducing costs

A focus on sustainability can significantly reduce a business’s costs. Across TUI GROUP, improved management of energy and fuel in offices and in our airlines realised nearly £16 million of cost savings since 2008, as well as saving 117,000 tonnes of carbon emissionsii. These are substantial savings. It makes sense from both a business and an environmental perspective to operate some of Europe’s most fuel-efficient airlines and to continue to invest in cutting edge aviation technology.

For our hotel partners the cost savings from operating more sustainably have also proved to be significant. For instance, one of our flagship hotel partners, Thomson Sensatori Crete, realised £100,000 cost savings in one year by improving its management of energy, water and waste. TUI GROUP’s Guidelines for Environmental Sustainability in Hotels highlight many case studies where eco-efficiencies have saved significant sums of money for our suppliers.

Attracting and retaining employees

Employee engagement is a further driver for sustainability in business. Research shows that a company’s reputation is increasingly important to today’s employees who are looking for synergy between their own and their employer’s values. Frequently we hear from new colleagues that TUI GROUP’s sustainability performance influenced their choice of employer. One of TUI GROUP’s core values is Responsible Leadership, which is increasingly being embedded into behaviour and performance metrics.

Protecting destinations

At a macro level it is imperative that tourism businesses seek to address sustainable development challenges. Global issues such as climate change, water scarcity, poverty, child exploitation and pollution impact on destination communities and environments as well as the quality of our customers’ holidays, so it makes sense for us to address those issues. Protecting destinations, in common with the other reasons to be more sustainable, is about protecting and enhancing the future of our business.