New ESG Report Points To Small Rise In Diversity & Inclusion Activity

The UK’s largest leisure & hospitality firms are stepping up their efforts to become greener but according to a new Environmental, Social, and Governance (ESG)* report published today, the pace of change is slower than that of the retail sector.

National law firm Irwin Mitchell has analysed the annual reports of the retailers in the FTSE 350**. The study looks at the frequency of the phrase, ‘ESG’, along with other related words such as ‘diversity’, ‘net zero’, and ‘Scope 3’ emissions. Irwin Mitchell examined the current and the previous annual reports of businesses which include Whitbread, Weatherspoon’s and Entain.

References to ‘ESG’ have increased from 443 to a total of 550 across all leisure & hospitality businesses in the FTSE 350. Furthermore, 78% of companies use the phrase ‘ESG’ more frequently in their most recent annual reports compared to the previous editions.

Irwin Mitchell’s ‘Beyond Words’ study reveals differences between leisure & hospitality businesses listed on the FTSE 350 companies in and those in the retail and consumer goods sub-sectors.

In terms of the number of 'ESG' mentions, leisure & hospitality appears to lag retailers and businesses involved in the production of FMCGs. However, leisure and hospitality firms reported a 20% rise in mentions compared to retail which increased the use of ESG acronym by just 6.5%

Environment

Leisure & hospitality recorded notable increases in the use of environmental words such as ‘climate change’, ‘net zero’ and ‘decarbonisation’. According to the analysis, mentions of climate change’ have gone up by 37% whilst ‘net zero’ and ’decarbonisation’ shot up by 20%.

References to ‘Scope 3’ emissions, the category of greenhouse gas emissions that are indirect emissions resulting from the activities of an organisation but occur from sources not owned or controlled by the organisation, increased by 65% compared to Retail (73%) and producers of FMCGs (38%).

Expert Opinion

“Businesses of all sizes must prioritise climate action and sustainability to succeed in an evolving business landscape. For some, reporting on Scope 3 emissions is now a legal requirement, not just a voluntary commitment.

“Companies are now choosing business partners based on their environmental credentials and carbon reduction actions. If you’re unable to demonstrate climate action, you may risk losing clients.”
Keith Davidson, environmental law partner at Irwin Mitchell 

Diversity and inclusion

There are also variations in the mentions of diversity, equity & inclusion (DE&I). The leisure & hospitality sector witnessed a small rise of 3%, with mentions increasing from 63 to 65. In contrast, the retail sector decreased its DE&I references by 7%.

Charlotte Rees-John, partner and Head of Irwin Mitchell’s Retail, Hospitality and Leisure sector, said:

“Annual Reports are a window into the soul of an organisation. They are carefully curated documents and are a vital tool for companies to communicate their commitment to their numerous stakeholders on a range of issues, including ESG.

"Our latest study highlights the commendable efforts that the UK's largest leisure and hospitality businesses are making with ESG. Although they appear to be engaged with DE&I initiatives, with an increase in the number of average mentions per report, it is not a significant increase and it could suggest that there is more work to be done."

Irwin Mitchell offers a comprehensive range of ESG advisory services including DE&I training modules, cyber security, and Net Zero readiness assessments.

* Environmental, Social & Regulation    ** The FTSE 350 is the 350 largest companies by market capitalisation on the London Stock Exchange. It consists of the FTSE 100 and FTSE 250

About the research

The analysis for this report was conducted in-house between 28th and 31st January 2024. The research examined the two most recent annual reports from each of the 50 businesses included in the analysis. Several search words and phrases were used, including 'ESG', 'cyber', 'climate change', 'decarbonisation', ‘Scope 3 emissions’ and 'net zero'. For the DE&I analysis, words such as 'diversity', 'inclusion', 'equality', 'ED&I', 'D&I', and 'DE&I' were searched. In cases where 'diversity' and 'inclusion' were mentioned together, it was counted as one mention in the overall count. Each search was manually checked for accuracy.