It’s easy to think that new EU sustainability laws and directives are designed for the big players, leaving small businesses unaffected. But the reality is that these regulations have far-reaching implications and even the small businesses, including those in tourism and hospitality, need to start getting ready… now.
The Corporate Sustainability Reporting Directive (CSRD), a recent regulation from the European Union, is set to redefine the landscape of corporate accountability, particularly in sustainability reporting. While primarily targeted at large companies, its ripple effects will undoubtedly reach small businesses, also those in the tourism and hospitality sector. How come? Here are a few implications:
Direct impact by 2026: While the CSRD is currently focused on larger companies, it will extend to small businesses by 2026 with sector-specific reporting standards. This means small businesses from tourism and hospitality should, at least, start thinking about this now, as non-financial reporting will require extra knowledge, time and human resources.
Supply chain pressures: Large companies affected by the CSRD will demand sustainable practices from their entire supply chain. This means that even if you’re an independent hotel, a boutique tour operator, or a conference center, you might need to adopt greener practices or provide data on their sustainability initiatives.
Market opportunities: This is a silver lining! The growing emphasis on sustainability opens new doors. Small businesses in tourism that offer eco-friendly services, or those in hospitality that practice sustainable operations, might find themselves in higher demand. It’s an opportunity to innovate and stand out in the market.
Consumer awareness and the ripple effect of transparency: As larger businesses start to comply with the CSRD, their non-financial reporting will become more transparent, highlighting their sustainability efforts in a way that’s more visible to consumers. This increased transparency from large companies is likely to elevate consumer awareness and expectations around sustainability. As a result, travellers and guests will not only become more familiar with sustainability concepts but will also begin to expect similar levels of environmental and social responsibility from small businesses in the tourism and hospitality sector.
What actions you can take today to make your business ready for the upcoming changes?
- Educate yourself and your team: Stay informed about new regulations and understand their implications. Ensure that your staff understands the importance of sustainability and how they can contribute to these efforts. Training and education are key to successfully implementing sustainable practices, and sustainability reporting, in your business.
- Begin sustainability monitoring: Start by identifying a few key non-financial Key Performance Indicators (KPIs) related to sustainability in your business. These could include measures like energy usage, waste reduction, or local sourcing. Begin tracking these KPIs to understand your current sustainability footprint. Play with an idea of reporting, test how collecting data can be done in your company.
- Publish your first (imperfect) non-financial report: Take the bold step of publishing your first non-financial report, even if it’s not perfect. This report should include the sustainability KPIs you’ve been tracking. The goal here is to be transparent about your efforts and learnings in sustainability. This transparency can significantly enhance your brand image and engage customers who are increasingly interested in supporting businesses that demonstrate environmental responsibility.
- Engage with stakeholders: Keep your customers, employees, and local community informed about your sustainability journey. Engaging with your stakeholders does more than just gather feedback; it opens doors to collaborative innovation and deeper insights.
The CSRD and similar environmental regulations are not just for the big corporations. They are a signal of a broader shift towards sustainability that affects businesses of all sizes. For small businesses in the tourism and hospitality sector, recognizing and adapting to these changes is not just about compliance; it’s about seizing opportunities for innovation, differentiation, and long-term growth.
I’d love to hear your thoughts! How is your business responding to these new sustainability regulations?
P.S. This article has been inspired by a recent webinar with Magda Leszczyna-Rzucidło (part of Travindy‘s online course “Sustainable tourism in practice“), where Magda presented an overview of the new EU sustainability regulations and financing opportunities for tourism businesses.