IHG Hotels & Resorts Responsible Business Report 2022 PDF

True Hospitality for Good RESPONSIBLE BUSINESS REPORT 2022 IHG Responsible Business Report 2022 Introduction CONTENTS About this report Our approach to responsible business With hotels in thousands of communities all over the world, our business and brands touch the lives of millions of peopl...

True Hospitality for Good RESPONSIBLE BUSINESS REPORT 2022 IHG Responsible Business Report 2022 Introduction CONTENTS About this report Our approach to responsible business With hotels in thousands of communities all over the world, our business and brands touch the lives of millions of people every day. By caring for our guests and colleagues, working together with our hotel owners, protecting the environment and giving back to our communities, we deliver our purpose of True Hospitality for Good. Our actions are shaped by a culture of strong governance and policies, and a series of ambitious commitments set out in our Journey to Tomorrow 2030 responsible business plan.  See our assurance statements for carbon and water and our full ESG databook at: https://www.ihgplc.com/en/responsiblebusiness/reporting Introduction SECTION 2 SECTION 3 SECTION 4 Our approach to responsible business Journey to Tomorrow Appendix 23 Our people 46 UN Sustainable Development Goals 05 About IHG® Hotels & Resorts 09 Our approach to responsible business 27 Communities 48 Data tables 06 Our business model 12 ESG performance 32 Carbon & energy 07 13 Governance 35 Waste 15 Managing risk 39 Water 17 Collaborating with our suppliers 41 Biodiversity 03 Chair’s statement 04 CEO’s statement Our strategy 08 2022 highlights 44 Stakeholder engagement Appendix In addition to the information found in this report and on our website, we externally report in our Annual Report. SECTION 1 Journey to Tomorrow In this report, we will share our approach, progress and plans on how we will continue to shape the future of responsible travel. This will include an overview of IHG’s responsible business strategy and environmental, social and governance (ESG) performance for 1 January to 31 December 2022 (referred to as ‘this year’), focusing mainly on the activities of our operations across the world. Where we have access to wider data sets from across our value chain, we have indicated the change in scope. We obtain third-party assurance over selected data disclosed in this report, as indicated in our 2022 assurance statements. 20 Creating a great place to work  See our Annual Report at https://www. ihgplc.com/en/investors/annual-report 02 IHG Responsible Business Report 2022 Expectations of companies are always changing – whether it’s a new generation of travellers connecting with brands in different ways or pushing to see businesses operate more responsibly; investors increasing focus on environmental, social and governance topics; or people wanting to work for a company that cares about them and the world around them. Our approach to responsible business Our Responsible Business Committee is in place to specifically monitor progress against these 2030 commitments, including those relating to carbon and energy reduction, community Delivering our plans Ultimately, our ability to match words with robust plans and actions is what counts. In 2022, we made important progress in a several areas, including increasing the diversity of senior leadership in the US and UK and celebrating 90 graduations from our Rise programme, which focuses on increasing the number of women in General Manager and other senior positions in our managed hotels. In our communities, progress included supporting charities providing aid to people in need following natural disasters and war in Ukraine, and time has been spent mapping how we reach and measure our commitment to improve the lives of 30 million people by 2030. For our environmental commitments, we have launched a range of tools and metrics to support our hotels in reducing their carbon, waste and water impacts. The nature of having meaningful commitments that stretch to 2030 means IHG is on a journey that requires significant planning and consistent steps each year towards our goals. The progress made to date has put us on the right path and is testament to the strength of our leadership, colleagues, owners and partnerships. In my first six months as Chair, I have seen first-hand the desire and diligence required to succeed. As a Board, we will focus on ensuring this continues to be matched with measurable progress and agility, and that it is ingrained within IHG’s strategy and culture. I would like to thank colleagues, owners and partners for their continued collaboration and hard work for the greater good. Appendix Welcome to IHG® Hotels & Resorts’ Responsible Business Report, which outlines our commitment to operate and grow in ways that support our people, drive positive change in our communities, and look after the world around us. Aligned to the UN Sustainable Development Goals (SDGs), Journey to Tomorrow – our 10year action plan of clear responsible business commitments for our people, communities and planet – sets out a dedicated response in critical areas to our Company, growth aspirations and our stakeholders. Part of my role as Chair is to encourage Board development and oversee changes that build and add new expertise and insights in recognition of the evolving nature of our business and stakeholder expectations. To this end, I review the training and development needs with each Director on a regular basis, with Board and Committee meetings regularly used to update Directors on developments in the environment in which the business operates. In 2022, these sessions included detailed discussions on the socio-political and economic outlook against the backdrop of war in Ukraine, labour market challenges, China’s Covid policy and the move to a more decarbonised economy. Collaboration is critical to our progress. Given our asset-light, largely franchised business model, many of our commitments require thoughtful ways of working with our hotel owners, including close communication with the IHG Owners Association, which represents thousands of our owners globally. To go further and faster against our ambitions, we have also built partnerships with expert organisations – whether it’s energy efficient building specialists or international aid organisations that can help us achieve our commitments on a global scale. This year, we celebrated our 10-year partnership with CARE International, whom we have supported in providing a lifeline to vulnerable people in times of need, including through a range of humanitarian response efforts over the past decade. Journey to Tomorrow Our Chair’s Statement IHG’s commitment to responsible business starts at the top. A clear part of the Board’s agenda is to ensure the highest ethical standards of governance are maintained to support our culture, values and commitment to conducting business responsibly; and our CEO, Executive Committee and Senior Leaders make sure governance is embedded, measured and upheld on a daily basis, adapting policies and initiatives if necessary to ensure continued alignment of strategy and culture. impact, diversity, equity and inclusion, and the incorporation of climate-related financial risks and opportunities into IHG’s strategy and risk processes, in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Our approach to responsible business I have joined IHG at a time when there is great focus on the environmental and social impact of businesses, and in particular an ability to help build a more resilient and healthy society and planet. IHG understands this and has put meaningful, relevant and ambitious commitments in place to operate and grow in the right way for all stakeholders, aligned to its purpose of True Hospitality for Good and driven by a clear focus on action, change and measurement. Introduction CHAIR’S STATEMENT Deanna Oppenheimer IHG Chair 03 IHG Responsible Business Report 2022 Our stakeholders and society as a whole expect this more rounded approach and to ensure it is embedded within our culture and operations, one of four priorities in our strategy is to care for our people, communities and planet. This is underpinned by our 10-year Journey to Tomorrow responsible business plan, which sets out commitments designed to have a positive impact on our business and the world around us. To ensure we continue making progress, we hold important conversations around DE&I, including leader-led talks and the expansion of our Employee Resource Groups (ERGs), and we have extended conscious inclusion training to frontline hotel teams. Furthermore, we were named a Best Place to Work for LGBTQ+ Equality, earning a 100% score on the Human Rights Campaign Foundation’s Corporate Equality Index for the eighth year running. Our work with charities is also critical to how we can make an impact among our communities, and in 2022 we supported organisations responding to numerous natural disasters around the world, as well as those providing aid, shelter and supplies to people impacted by the war in Ukraine. We also worked with the Tent Partnership for Refugees to train and hire refugees in some of our hotels in the US. Sustainable future When it comes to sustainability, there is a clear opportunity for the industry to adopt new practices, with progress requiring close collaboration with our hotel owners, suppliers, industry associations and government. To achieve our decarbonisation target alongside our growth ambitions, we are driving adoption of energy reduction measures in our hotels that prioritise both a positive environmental impact With more than 1,800 hotels in our global pipeline, we recognise the importance of developing zero or very low carbon hotel prototype designs for future generations. Once again, collaboration with governments, peers and trade bodies will be crucial to supporting owners and the industry. Reaching our target will require the decarbonisation of electricity grids and a policy framework that supports businesses accordingly. In 2022, we helped to secure a tax credit for commercial buildings included in the Inflation Reduction Act in the US. This legislation reduces costs for owners associated with implementing energy efficiency measures for their properties. Other important steps during the year included updating the sustainability credentials of our guest bathroom supplies, launching global food waste training for hotels, and expanding initiatives with food rescue organisations to minimise waste. This all sets us up for an exciting year ahead, where we will continue advancing our talent and diversity agenda, being there for our communities in times of need, and investing significantly in the global cause to cut carbon emissions and waste. I want to thank our incredibly dedicated colleagues, owners and partners for keeping responsible business at the heart of what we do and striving to make IHG the best company it can be. Appendix We have made more important strides together with our hotel teams and owners, partners and industry bodies against a stretching set of responsible business commitments that are helping IHG operate and grow in ways that look after our people, communities and planet. There is a lot to achieve by 2030, but I feel great pride in seeing our Company move forward in so many areas. This year, where we were again proud to be named a Kincentric Global Best Employer, we have made important progress with our diversity, equity and inclusion (DE&I) agenda. Today, 21% of our global leaders are ethnically diverse, representing 20 nationalities, and 34% of our leaders working at Vice President level and above are female. As a global business, we’re proud to be a part of thousands of communities and are focused on improving the lives of 30 million people through supporting disaster relief, tackling food poverty and by providing skills training that helps drives social and economic change. This year’s Giving for Good campaign saw colleagues volunteer in different ways to help more than 100,000 people and we have launched a new network of Community Champions to increase our impact. Our free IHG Skills Academy virtual learning platform has expanded internationally to offer more people access to learning and development opportunities that improve employment prospects, and in the US we have partnered with Historically Black Colleges and Universities to develop a more diverse and inclusive early careers pipeline in what is our largest market. and return on investment for our owners. We’ve also stepped up the use of technology that makes sustainability more seamless, actionorientated and insight-led, and in 2022 we developed our first community solar initiative for our hotels located in Maryland in the US. All of this has helped us to reduce carbon emissions on a occupied room basis by 5.8% from 2019. Journey to Tomorrow Our CEO’s Statement Strategic progress We also launched minimum core requirements for responsible labour practices in accordance with IHG’s Human Rights Policy across our owned, leased and managed hotels. Our approach to responsible business What’s critical to our success as a business is how it is achieved. At IHG Hotels & Resorts, we believe profit and growth are intrinsically linked with doing the right thing, and as we have evolved as a business, so has our ambition. Today, we measure growth in multiple ways, from our scale, brand portfolio, guest satisfaction, loyalty programme, market share and business reputation, to how we operate with purpose and in responsible and sustainable ways. Introduction CEO’S STATEMENT Keith Barr Chief Executive Officer 04 IHG Responsible Business Report 2022 IHG Hotels & Resorts is a leading global hospitality company, with 18 hotel brands and IHG® One Rewards, one of the industry’s largest loyalty programmes. We have over 6,000 open hotels in more than 100 countries, and a further 1,800 hotels in the development pipeline, and our purpose of True Hospitality for Good, we strive to make a difference every day to our colleagues, guests, communities and the world around us. 911,627 281,468 72% Total system size by region total rooms in the IHG system total rooms in the pipeline 28% managed rooms 18% 25% 57% Americas 57% EMEAA 25% Appendix <1% owned, leased and managed lease rooms Journey to Tomorrow franchised rooms* Our approach to responsible business About IHG Hotels & Resorts Introduction INTRODUCTION Greater China 18% * Includes rooms in IHG’s system that have been added through the Iberostar Beachfront Resort commercial agreement 05 IHG Responsible Business Report 2022 INTRODUCTION CONTINUED Introduction Our brands  For definitions of our three main models, see page 48 in our Appendix. Key differences between our three main models Business model Hotel ownership IHG capital intensity Employees Brand ownership, marketing and distribution Franchised* Third party Low Third party IHG Managed Third party Low IHG and third party IHG Owned, leased and managed lease IHG High IHG IHG * Includes the Iberostar Beachfront Resorts commercial agreement Appendix We generally franchise or manage hotels, with the decision largely driven by market maturity, owner preference and, in certain cases, the particular brand. Hotels in the Essentials category tend to be franchised, while Luxury & Lifestyle hotels are, more often than not, managed. Journey to Tomorrow We focus on offering guests great choices, rewards and experiences, while continuously developing and investing in our people, operations, sustainability, technology and design, in order to drive performance, demand and returns for our owners. IHG is an asset-light business, and our focus is on growing fee revenues and fee margins, which we can do with limited capital investment. This enables us to grow and invest in our business while generating high returns on invested capital and strong cash flow. Our approach to responsible business Our business model 06 IHG Responsible Business Report 2022 Our purpose True Hospitality for Good Our ambition Aligned to our purpose of True Hospitality for Good and building on years of important progress, Journey to Tomorrow puts IHG on a longer-term path to positive change for our people, communities and planet. Our priorities Build loved and trusted brands Customer-centric in all we do Journey to Tomorrow To deliver industry-leading growth in our scale, enterprise platform and performance, doing so sustainably for all stakeholders, including our hotel owners, guests and society as a whole. Being a responsible business Our approach to responsible business Our strategy Our 2030 responsible business plan Introduction INTRODUCTION CONTINUED Our strategy Create digital advantage Care for our people, communities and planet Recognising the importance of growing successfully and sustainably, the fourth priority of our strategy is underpinned by a series of commitments to 2030. Our people Communities Carbon & energy Waste Water Champion a diverse culture where everyone can thrive Improve the lives of 30 million people in our communities around the world Reduce our energy use and carbon emissions in line with climate science Pioneer the transformation to a minimal waste hospitality industry Conserve water and help secure water access in those areas at greatest risk Find out more Find out more Find out more Find out more Find out more Appendix Use our scale and expertise to create the exceptional guest experiences and owner returns needed to grow our brands in the industry’s most valuable markets and segments. Delivered through a culture that retains and attracts the best people and embraces opportunities to positively impact the world around us. 07 IHG Responsible Business Report 2022 Introduction KEY PROGRESS 2022 highlights Overall employee engagement at 86% (+1% on 2021), placing IHG as a Kincentric Global Best Employer. 21% of our global leaders are ethnically diverse, representing 20 nationalities. Globally, 34% of our leaders working at Vice President level and above are female, and we are one of the few large global businesses to have a gender-balanced all-employee population, of which 58% is female. Recognised as Best Place to Work for LGBTQ+ Equality in the Human Rights Campaign Foundation’s Corporate Equality Index in the US for the eighth year in a row, as well as in Mexico for the first time. Our IHG Academy Programme trained and mentored more than 7,400 people in 2022. Colleagues dedicated more than 57,000 hours to making a positive difference to over 100,000 people during Giving for Good month. Diversified early careers pipeline through development of a new programme with Historically Black Colleges and Universities in the US. Teamed up with Tent Partnership for Refugees in the US to provide refugees with skills and jobs. Helped launch the VietHarvest and JapanHarvest food rescue programmes through funding and colleague participation. Introduced new energy metrics for hotels to accelerate decarbonisation. Rolled out our Hotel Energy Reduction Opportunities (HERO) tool and decarbonisation training to improve energy efficiency in our hotels. Secured bulk bathroom amenity supplier for more than 4,000 Essentials and Suites hotels to ensure the removal of bathroom miniatures, while developing a toolkit for hotels in EMEAA to reduce single-use plastics. Launched our global food waste training e-learning module in 13 languages and made it part of the General Managers training programme in support of food waste measurement and reduction. Helped secure a tax credit for owners making their properties more energy efficient through our work with the US government. Launched our first community solar initiative for hotels in Maryland, US. Appendix Launched minimum core requirements for responsible labour practices for IHG-owned, leased and managed hotels. Responded to 10 relief efforts alongside our charity partners around the world. Planet Journey to Tomorrow After providing corporate colleagues and General Managers with conscious inclusion training in 2021, we extended this in 2022 to include frontline colleagues. Communities Our approach to responsible business People 08 IHG Responsible Business Report 2022 Introduction SECTION 2 ESG performance 12 Governance 13 Managing risk 15 Collaborating with our suppliers 17 Creating a great place to work Appendix 10 Journey to Tomorrow Our approach Our approach to responsible business Our approach to responsible business 20 09 IHG Responsible Business Report 2022 Introduction Key to delivering our strategic priority to care for our people, communities and planet is our Journey to Tomorrow plan. This is underpinned by commitments to our purpose, values, behaviours, workplace culture, risk appetite, and strong governance and accountability. Stakeholder engagement The effectiveness of our engagement methods is measured through a range of metrics, including our KPIs (such as signings and pipeline), performance, ability to attract and retain talent, employee engagement survey results, adherence to the policies covered by our Code of Conduct, and AGM results. The views and interests of other stakeholders, such as regulators and industry bodies, are also taken into consideration. Journey to Tomorrow The relationship we build with our stakeholders is critical to informing our business decisions and delivering on our purpose of providing True Hospitality for Good. It provides a foundation and understanding against which we measure ourselves, protect our reputation and develop our commercial and social awareness. Our approach to responsible business Our approach to responsible business Our approach to responsible business shapes our operations and the strategic investments we’re making to drive performance and strengthen our enterprise, recognising that how we grow and create positive change for the greater good is being followed more than ever by our stakeholders. We engage with our stakeholders at all levels of the business, from the Board, through the Executive Committee, Senior Leadership and corporate functions, to frontline operations, working towards common goals to create shared value for all. Appendix  See information on our engagement with key stakeholders in our Appendix on pages 44 and 45 and in our Section 172 statement in our 2022 Annual Report, pages 90 and 91. 10 IHG Responsible Business Report 2022 To guide our work and ensure that we can plan and prioritise our impact, we regularly conduct materiality assessments of ESG issues, which helps to align our focus with the most material issues to society, our industry and the long-term success of IHG. 5 A total of 17 material ESG issues were identified as being both relevant to IHG and important to our stakeholders – having the potential to create both risks and opportunities for our business. From a reporting perspective, we only cover issues that are deemed to be of a medium to high importance to our business. Each issue is covered within this report. The outcome of this work demonstrated that our stakeholders increasingly measure profit, growth and success in relation to how companies operate responsibly across the ESG agenda. Our commitments set out in our Journey to Tomorrow plan continue to create a roadmap for positive change that includes careful consideration of our responsibilities to all stakeholders. 1 9 7 2 4 14 10 11 17 12 15 16 13 6 8 3 IHG is a Founding Partner of the Global Business Travel Association (GBTA) sustainability programme and is also a representative on GBTA’s Sustainability Leadership Council. High Relevance to IHG Culture People and communities Planet 1 Cybersecurity and information governance 5 13 Energy management 6 Training and development 14 Climate change 2 Ethical business practices 7 3 Policy engagement & advocacy 8 Employee wellbeing 15 Waste management & circular economy 4 Responsible procurement Safety and security Diversity, equity & inclusion 9 Human rights 10 Socio-economic impact (including disaster relief) Appendix  Read more in the Appendix on pages 46 and 47. Journey to Tomorrow Medium We are committed to ensuring our actions contribute to the UN SDGs and have aligned our Journey to Tomorrow programme to those goals where we feel we can have most impact. Our approach to responsible business Our 2020 materiality assessment played a key role in shaping the creation of our 2030 Journey to Tomorrow plan, which focuses on driving positive change for IHG and the world around us. Conscious of the rapidly evolving ESG landscape, in 2022, we worked with a third party to ensure our work continues to address key areas and identify where we can leverage our expertise and skills to make the biggest impact. The scope of the assessment covered all areas of our business model, while taking into account our asset-light structure and principal risks. Importance to stakeholders Materiality Introduction OUR APPROACH TO RESPONSIBLE BUSINESS CONTINUED 16 Water management 17 Biodiversity 11 Respecting local cultures 12 Community activities 11 IHG Responsible Business Report 2022  See our ESG Databook for our reporting standards accounting For the sixth consecutive year, IHG was proud to have been listed in the S&P Dow Jones Sustainability World Index and S&P Dow Jones Sustainability Europe Index. IHG is listed as a constituent of the FTSE4Good Index. IHG scored B for climate and B for water in the 2022 CDP climate and water disclosures. Journey to Tomorrow Our reporting integrates the recommendations of the Sustainability Accounting Standards Board (SASB) and Global Reporting Initiative (GRI). In 2022, IHG received an AA rating (on a scale of AAA-CCC). Our approach to responsible business We participate in numerous ESG questionnaires and rating indices, including the S&P SAM Global (DJSI), CDP, MSCI, Sustainalytics, FTSE4Good, Institutional Shareholder Services (ISS) ESG and WDI. Introduction ESG performance The degree to which our value is exposed to material financial impacts from ESG factors has been rated ‘low’ by Sustainalytics. IHG participates in the Workforce Disclosure Initiative (WDI) to disclose our workplace practices and performance and increased our score to 81% in 2022 (against a sector average of 66%). Appendix IHG was ranked ‘best-in-class’ in the ISS Environmental & Social Disclosure QualityScore and achieved an overall ISS ESG Corporate Prime Rating of C+ (as of 15 November 2022). 12 IHG Responsible Business Report 2022 Introduction The Board is supported by its principal committees in overseeing the delivery of strategic objectives and driving sustainable value for shareholders while considering the impacts on, and interests of, other stakeholders. The Board’s Responsible Business Committee reviews IHG’s responsible business objectives and strategy, including the impact on environmental, social, community and human rights issues; IHG’s strategic approach to sustainable development and responsible procurement; and how IHG engages with stakeholders. Key considerations and recommendations are then shared with the Group Board. Supporting our Board and Executive Committee is the internal Responsible Business Governance Committee, which meets quarterly and includes Senior Leaders from departments across the business, such as Procurement, Human Resources, Legal, Operations, Corporate Responsibility, and Cybersecurity and Information Security. Overseeing our day-to-day responsible business activities, in 2022 it continued driving the implementation of the Group’s 2030 Journey to Tomorrow commitments, and our strategic priorities in the short to medium term. We regularly review our policies and implementation procedures to ensure we continue to meet best practice in these areas.  For more on our governance structure, see pages 90–104 of our 2022 Annual Report.  For more on our Responsible Business Committee, including membership and attendance at meetings, see pages 110 and 111 of our 2022 Annual Report. Appendix In 2022, the Responsible Business Committee focused on monitoring progress against the Group’s 2030 responsible business commitments set out in our Journey to Tomorrow plan. This included TCFD reporting and reviewing the Group’s responsible procurement programme, its human rights programme and Modern Slavery Statement, plus considering the inclusion of an ESG metric in the Long Term Incentive Plan (LTIP) for Executive Directors. Journey to Tomorrow This year, Jill McDonald retired from the IHG Board as Non-Executive Director and Chair of the Responsible Business Committee. Effective 28 February 2023, it concluded her nine-year term on IHG’s Board. Senior Independent NonExecutive Director Graham Allan replaces her as Chair of the Responsible Business Committee. Our approach to responsible business Governance Our commitment to responsible business starts at the top. Our Board is focused on ensuring we maintain the highest ethical standards of governance to support our culture, values and commitment to conducting business responsibly. Our CEO, Executive Committee and Senior Leaders make sure governance is embedded, measured and upheld on a day-to-day basis. 13 IHG Responsible Business Report 2022 Handling information responsibly Responsible behaviours and ethics IHG is committed to providing a safe, secure and healthy environment for all our colleagues, guests and visitors. All operations must comply with all applicable health, safety and security laws. Beyond compliance with the law, IHG works to identify further improvements to the way safety and security risk is managed within our hotels and offices and has mandatory Brand Safety Standards in place for all hotels globally to drive consistency in this area. We are committed to ensuring that guests, members of our loyalty programmes, colleagues, shareholders, owners and other stakeholders trust the way we manage data. As part of our privacy and information security programmes, we have standards, policies and procedures in place to manage how personal data can be used and must be protected. Underlying our behaviours is our Code of Conduct and related policies, all of which influence how we interact with our stakeholders. By role modelling our behaviours, IHG’s leaders create an environment that encourages rapid decision making and supports our growth aspirations within a framework of due diligence and assurance processes that ensures we continue to operate responsibly. The Code of Conduct is reviewed and approved by the Board on an annual basis. In 2022, we developed and launched a new Code e-learning module to support updates to the Code.  Read more on our Code of Conduct, on pages 41 and 42 of our 2022 Annual Report.  See our website for more on our responsible business-related policies and position statements. It is important that our colleagues and any person who has a relationship with IHG, including our suppliers and their workers, feel comfortable reporting ethical concerns. To facilitate this, we have a confidential reporting channel through which ethical concerns or breaches of the IHG Code of Conduct can be reported, including those in relation to human rights and modern slavery. IHG’s Code of Conduct is available in 14 languages on our website at ihgplc.com/responsible-business and on the Company intranet.  See pages 40–42 of our 2022 Annual Report for more on our culture. Our Board and Committee governance structure BOARD Audit Committee Responsible Business Committee Nomination Committee Remuneration Committee Executive Committee General Purposes Committee Appendix  Initiatives to respond to legal, regulatory and ethical compliance risks, including bribery and corruption, are on page 49 of our 2022 Annual Report. Speaking up  See more on cybersecurity and information governance risks on page 47 of our 2022 Annual Report. Journey to Tomorrow IHG’s Code of Conduct is the framework for how we do business at IHG, and underpins our strategy and commitment to providing True Hospitality for Good. Our key principles and policies are included in the Code, which enables employees and colleagues working in IHG corporate offices, reservation centres, managed, owned, leased, and managed lease hotels to make the right decisions, in compliance with the law and IHG’s ethical standards.  See page 51 of our 2022 Annual Report for more information on IHG initiatives to respond to safety and security risks. Our approach to responsible business Safety and security Introduction GOVERNANCE CONTINUED Disclosure Committee Board committees Management committees 14 IHG Responsible Business Report 2022 Managing IHG’s resilience ESG factors The Board is ultimately accountable for establishing a framework of prudent and effective controls, which enable risk to be assessed and managed, and is supported by the Audit Committee, Executive Committee and delegated committees. We are committed to monitoring and ensuring the continued effectiveness of our human rights approach, our social responsibility and environmental performance, and also recognise that expectations are increasing for us to manage and drive responsible business through our supply chains and across our wider business, including with our franchisees.   For more on the Board’s approach to risk appetite, see page 41 of our 2022 Annual Report. Our 2030 Journey to Tomorrow responsible business plan plays a central role in this regard, ensuring we continue to drive positive change for IHG and the world around us in line with these evolving expectations. Journey to Tomorrow The delivery of IHG’s individual strategic objectives and overall ambition requires us to continuously balance opportunities for strategic advantage or efficiency with the need to remain resilient and agile in the short and longer term. The Board considers and defines its risk appetite and tolerance as an active part of determining and monitoring our strategic priorities. Our approach to responsible business 543 PPI Introduction Managing risk Our Board and management, supported by the Risk and Assurance team, focus on assessing and managing the levels of risk in the business, including balancing opportunities for strategic advantage and efficiency with building resilience.   For more, see pages 49 and 51 of our 2022 Annual Report. Appendix 15 IHG Responsible Business Report 2022 The impact of climate change on the hospitality industry The potential impact of climate change-related uncertainties is evaluated as an integral part of other principal risks; however, if we fail to manage physical and transition risks effectively overall, this has the potential to impact performance and growth in key markets. Our management of these risks is also subject to scrutiny from a wide range of stakeholders, including regulators and investor groups, corporate clients, guests and colleagues. targeted reduction across franchised, managed, owned, leased and managed lease hotels by 2030 from 2019.   Our full TCFD disclosure can be found in our 2022 Annual Report on pages 54–61. Our climate transition plan We are aware that transitioning to a low-carbon economy requires global coordination and the support of our hotel owners. The franchised nature of our business model means that we do not have direct control over a large proportion of the emissions produced by the vast majority of our hotels. However, we can mandate certain interventions to hotel owners via our brand standards, as well as supporting them to implement their own decarbonisation initiatives through resources and tools and working with governments to advocate policies that make it easier for them to do so. In many markets in   For details of our climate transition plan and our mitigation strategies for all other identified physical and transition risks, please refer to pages 56–60 of our 2022 Annual Report. Supply chain risks We also recognise the potential environmental and social impacts of our supply chain and the need for our suppliers to operate with the same integrity and respect as we do. To ensure this, IHG requires new corporate suppliers to confirm their acceptance of the Supplier Code of Conduct (Supplier Code) at the onboarding stage (or demonstrate that they have equivalent policies in place). It is a contractual requirement for centrally negotiated programmes in which our hotels can purchase, while recommended guidance is also provided to managed and franchised hotels when purchasing locally. These standards are applicable within suppliers’ businesses, and across their supply chains. Under the Supplier Code, they are expected to support the protection of labour practices through their business activities concerning forced labour and human trafficking, as well as standards relating to the environment and diversity and inclusion – aligned to IHG’s responsible procurement agenda. We also run a third-party financial monitoring report on new suppliers to assess financial and commercial risk in our supply chains. While we aim to work with suppliers to resolve any issues identified, material breaches of the Supplier Code may lead to the termination of a supplier’s contract with IHG. New suppliers being onboarded are also required to complete our IHG Sustainable Supplier Questionnaire to increase collaboration with sustainable suppliers and ensure alignment with our Journey to Tomorrow ambitions. In 2022, we continued to build our risk programmes and worked with Procurement leadership teams across regions to develop risk profiles based on IHG’s material supply chain risks. This has helped identify control mechanisms and mitigate risks. Recognising that the impact of supply chain risk is not only an issue for Procurement but also for management agendas across IHG, we have reviewed and refreshed the objectives of our Supply Chain Risk Council. They focus on ensuring cross-functional collaboration, reviewing IHG’s profile of supply chain risks and corresponding methodology, and identifying emerging threats. At the end of 2022, 100% of new suppliers had signed the Supplier Code. A review of the Supplier Code commenced in 2022, informed by a benchmarking exercise, and an updated Supplier Code will be implemented in 2023. To see our Supplier Code and for more on our supply chain, see pages 17–19. As part of our supplier due diligence process, we continue to incorporate pre-contract criteria, which include questions on where products are sourced and/or manufactured to help evolve our understanding of our supply chains. For new suppliers of higher-risk products or services, we ask additional responsible procurement due diligence questions around labour practices, which cover recruitment fees and costs, worker accommodation and grievance mechanisms. This year, we have implemented several digital solutions to support responsible procurement, which have been integrated into our spend intelligence tool to provide better visibility of IHG’s focus areas, including labour practices, sustainability performance and financial risk. These are helping identify new opportunities, including diverse suppliers, and assisting the management and mitigation of supply chain disruptions. In 2023, we are looking to pilot additional risk intelligence tools. Appendix 46% Recognising that climate change represents a multi-faceted challenge requiring collaboration across different areas of the business, we’re embedding resilience into our existing processes. This includes ensuring the results of our climaterelated scenarios are incorporated into our longterm planning and other strategic initiatives, as well as considering the consequences of climate change to our guests, owners, investors and other strategic initiatives; and integrating these scenarios into future Board Strategy sessions. Our transition plan helps us to align the Group’s climate strategy with the wider business strategy to ensure we deliver on our carbon ambitions while continuing to grow the system competitively. Journey to Tomorrow It is important that we continue to meet the evolving expectations of our stakeholders, while capitalising on the sectoral opportunities associated with transitioning to a lower carbon industry, as well as assessing the aggregate impact of climate change on our business. Refreshing our scenario analysis has allowed us to reassess our varying levels of exposure to a range of potentially material opportunities and risks, including regulatory challenges as markets transition to lower carbon sources of energy. which we operate there is less urgency and limited market or regulatory pressure on the owners themselves to decarbonise, such as deregulated markets in the US, and in China, where the country’s net-zero target extends to 2060. Developing a business case for building electrification is more challenging with owners in western markets such as the UK and US where the relative cost of electricity and gas is high. Our approach to responsible business As a global business, IHG faces uncertainties from physical and transition risks relating to climate change. Our business model means that we share these threats and opportunities with our owners, including our dependency on their capacity to invest in the short and long term. Having made a formal commitment to support the recommendations of the TCFD in 2020, this year we refreshed our scenario analysis in line with our updated science-based target to reduce absolute Scope 1, 2 and 3 (from fuel and energy-related activities (FERA) and franchise estate) greenhouse gas emissions by 46% by 2030 (from a 2019 base year). Introduction MANAGING RISK CONTINUED 16 IHG Responsible Business Report 2022 Introduction About our supply chain Our corporate supply chains cover categories such as technology, office building and facilities management, and professional services, including marketing and communications, HR and management consultancy. Our Global Procurement function, empowered by our digital solutions and policies (such as the Supplier Code and Procurement Policy), plays a crucial role in establishing our expectations of our suppliers and business stakeholders to conduct business responsibly. This includes ensuring responsible business criteria are included in our supplier selection framework. Appendix Procurement of hotel goods and services required for building, opening, renovating and operating a hotel, such as energy, operating supplies and equipment, uniforms, food and beverage, furniture, fixtures and fittings and maintenance services, predominantly occurs at a local hotel level and are purchased by our franchisees. In some key markets, the IHG Procurement team has created procurement programmes for certain key goods and services. Hotel owners and IHG-branded hotels can purchase from suppliers under centrally negotiated contracts in these markets, leveraging IHG’s system-wide scale. IHG provides procurement programmes in the US, Canada, Mexico, Latin America, the Caribbean and Greater China and has been expanding this support in the EMEAA region in countries such as the UK, Ireland, France, Germany, Belgium, the Netherlands, Luxembourg, the UAE, Australia, New Zealand, Japan, Thailand, Singapore and Vietnam. Journey to Tomorrow Furthermore, several global technology and outsourcing providers have been identified as strategic supplier relationships due to the critical nature of their services. IHG engages with these suppliers to harness innovation, provide customer service, manage risk, and promote value realisation. We annually review our list of strategic suppliers and their delivery of our business objectives. Our approach to responsible business Collaborating with our suppliers We work with suppliers who share our commitment to operating responsibly and adopt ethical work practices that positively impact the planet, our people and our communities. Empowered by our procurement platforms, our Procurement teams play a crucial role in performing due diligence checks on suppliers. 17 IHG Responsible Business Report 2022 Diversity and inclusion in our supply chain Supplier engagement In 2022, we partnered with EcoVadis, a global leader in business sustainability ratings, to assess supplier risk and sustainability performance. To date, we have requested 92 suppliers globally to participate in the EcoVadis ESG risk assessment. Insights will be used to understand supplier performance, drive improved scores and identify ESG risks in our supply chain. In 2023, we will explore how EcoVadis assessments can be incorporated into our due diligence processes for new suppliers. Responsible procurement Our IHG Sustainable Supplier Questionnaire is mandatory for all new suppliers at the request for proposal (RFP) stage, helping us assess their environmental credentials. The questionnaire features sustainability-related questions regarding raw materials, manufacturing methods, transportation, and the product lifecycle, in addition to understanding practices surrounding carbon and energy, waste and water. An analysis of environmental criteria is fully embedded into sourcing processes, which empowers Procurement teams to make informed decisions. This year, 982 suppliers completed the questionnaire, with 41% of business awarded to IHG Green suppliers. TAKING ACTION Purpose-driven procurement – supporting indigenous populations As part of our global efforts to drive social impact and work with local suppliers in our supply chain, we have leveraged our partnership with Foodbuy, a Group Purchasing Organisation, to gain access to suppliers that make a difference by supporting indigenous communities in Australia. This includes stationery supplier Muru, a native nursery focusing on youth employment and protection of endangered species, with IHG’s spend to date contributing to the employment of two full-time staff. “We are proud that our great partnership with Foodbuy enables us to access national benefits programmes like Muru, which makes a difference by supporting indigenous communities.” Following the launch of Journey to Tomorrow in 2021, we sent out a survey to understand the sustainability priorities of our key suppliers and how they can help us achieve our commitments. Building on this in 2022, we engaged with high-performing suppliers in sustainability and the circular economy that provide carpeting, showers, furniture, bedding, mattresses, flooring and air travel to our hotels and corporate functions. This helped our Procurement team gain valuable insights into the sustainability journey of our suppliers, discuss future opportunities for collaboration, and build stronger relationships with our top-performing suppliers. Appendix In 2022, IHG gained exposure to more diverse business entities and saw our qualified diverse spending double in the US since 2021. Our spend with diverse suppliers this year was $81.6 million and the top three highest spend diversity categories were small businesses, women-owned businesses and minority-owned businesses. Following the findings of a workplace gender analysis carried out in factories within our linen supply chain in India in 2021, this year we worked with CARE International UK to create a more gender-inclusive workplace. This included hosting an interactive workshop with internal stakeholders to review the findings and recommended actions, which we will continue to implement in 2023. Journey to Tomorrow In 2022, we continued to focus on driving inclusion in our US supply chain in support of the People and Community pillars of Journey to Tomorrow. We introduced EPIC (Engaging Partnerships through Inclusion and Collaboration), our Supplier Diversity Programme, at the 2022 Americas Investors & Leadership Conference. We also recognised our diverse suppliers and our ‘EPIC Allies’ – suppliers with a verifiable Supplier Diversity Programme who are working with us to identify diverse suppliers in their respective supply chains. Procurement plays a key role in implementing key Journey to Tomorrow initiatives by working with internal stakeholders to identify the required supply chain solutions. For example, Procurement has provided critical support in selecting suppliers that can deliver energy conservation measures for existing and newbuild hotels. Our approach to responsible business Our global Procurement Excellence team ensures a robust approach to responsible procurement. It provides training and guidance for our colleagues, including our procurement managers within our corporate offices and managed hotels. For example, this year, we delivered training to the Global Procurement team, showcasing our responsible procurement dashboards and enabling our colleagues to gain better visibility of our suppliers and leverage the tools to identify new opportunities. In 2023, we will roll out our updated Procurement Policy, which will include additional guidance on our commitment to sustainability and diversity in our supply chain. In 2023, we intend to expand this programme to the UK, with the market featuring a good selection of diverse suppliers and development councils. Introduction COLLABOR ATING WITH OUR SUPPLIERS CONTINUED Matt Tripolone, Managing Director, IHG Hotels & Resorts Australasia & Pacific 18 IHG Responsible Business Report 2022 Cage-free egg reporting Food and beverage Responsible procurement at our new Windsor Head Office ‘ As at 31 December 2022* United States 88% Canada 5% Europe 23% Other EMEAA 3% Global** 59% Notes * Figures reflective of hotels with a cage-free brand standard, a free-range egg brand standard, hotels that operate in markets that have a cage-free egg government regulation, accounts for any cage-free or free-range egg offering (liquid or whole egg). ** 2022 figure accounts for 99.5% of our system size. Data is not currently available for the remaining 0.5%. This aligns with the ESG Databook scope of reporting. We are working with a leading workwear supplier to refresh our Crowne Plaza® Hotels & Resorts uniforms across our managed and franchised estate throughout Europe. As well as eliminating unnecessary packaging and using recycled materials, the garments are transported by sea where possible to reduce emissions created by air travel. To further reduce waste, the range has been standardised for front-of-house roles, and uniforms are designed to be flexible, allowing colleagues to interchange roles when operating with a skeleton staff model or if a dual role is required. At the same time, the supplier has teamed up with another organisation to ensure the uniforms can be responsibly recycled or donated at the end of their lifecycle. the number of colleagues who have completed our responsible procurement e-learning training Embedding best practice across the business We continue to expand our education programme to promote responsible procurement best practices for corporate, managed and franchise colleagues. So far, it’s been completed more than 18,000 times since its launch in 2019. For our corporate colleagues, we have developed a new e-learning procurement training that includes a module on responsible procurement, which is aligned with our risk, sustainability and supplier diversity programmes and will be launched in 2023. We also provide managed and franchised hotels with Responsible Sourcing Principles to help our hotels make responsible purchasing decisions. Supporting small businesses IHG complies with statutory reporting duties on payment practices and performance and is committed to supporting smaller suppliers – striving to pay those with fewer than 50 employees within 30 days, where centrally accounted for across our UK corporate, managed, owned, leased and managed leased hotels. Appendix Where possible we try to work with innovative suppliers to ensure we source responsibly. For example, at our Windsor HQ, a leading British furniture manufacturer has supplied a range of tables, chairs and cabinets. Carbon neutral certified, the supplier embeds sustainability throughout its value chain by using water-based paints which are EU Ecolabel certified and low VOC emitting lacquers. For example, The Mix table is made in the UK using 100% renewable electricity and is FSC certified. The lino top is made using 27.5% postindustrial recycled content and 97% renewable materials, which reduces waste and conserves raw materials. The supplier has also partnered with an organisation to plant a tree with every 10 items supplied, contributing to reforestation projects. Percentage of hotels with cage-free egg brand standards Crowne Plaza uniform >18,000 Journey to Tomorrow At the 02 InterContinental London Chefs grow their own produce on the roof of the hotel. TAKING ACTION TAKING ACTION Our approach to responsible business With millions of meals served daily in our hotels worldwide, we must carefully consider the way in which we source our food and beverage items, so that we minimise our impact wherever possible. Whether our guests are travelling for business or leisure, we understand the need to offer a variety of meal options, while also considering health, wellbeing and ethical sourcing, such as sustainable seafood and animal welfare. For example, some of our brand standards require hotels to offer locally sourced food with a lower carbon footprint. Our Responsible Sourcing Principles also guide selecting suppliers with well-respected third-party accreditation for sustainably sourced products and/or welfare-supporting practices, such as Fair Trade. We work closely with our suppliers to source cage-free eggs across our estate, focusing primarily on the IHG brands with a significant presence in the US, so that we can make the most significant difference. Although the impact of the avian influenza outbreak in the US and supply conditions have proven challenging, we continue to progress the use of cage-free eggs in brands and geographies where available. We have continued to source cage-free eggs and have increased the percentage of hotels globally with a cage-free egg brand standard. We also provide training around cage-free sourcing to all colleagues globally. Introduction COLLABOR ATING WITH OUR SUPPLIERS CONTINUED 19 IHG Responsible Business Report 2022 Introduction Developing and retaining talent We have several forums available for employees to share their thoughts, including employee resource groups (ERGs), a designated NonExecutive Director for workforce engagement and our employee engagement survey, known as Colleague HeartBeat, which allows people to express their views on key aspects of working at IHG. To achieve our ambitions, we know we need to develop and retain a diverse and talented workforce, which involves creating an open and inclusive culture that promotes career development and equal opportunity, and this year we developed more tools and resources we need as individuals and as a business to be successful. Our growth as individuals and as a company is encapsulated in our employee brand. Celebrating the inclusive culture we create at IHG, it incorporates our promise to support employees on every step of their career journey by giving them Room to Belong, Room to Grow and Room to Make a Difference. To support this, in 2022 we launched Room to Grow Week, a series of events and resources to champion personal and professional development. We also ensure our people managers are well-equipped to support our performance and development processes through offering simplified resources and delivering masterclasses to bring our processes and practices to life. Appendix In our 2022 survey, our overall employee engagement stood at 86%, a 1% improvement on last year, which once again saw IHG accredited as a Kincentric Global Best Employer. The survey highlighted areas that we can strengthen further, including enabling infrastructure and technology, a continued focus on rapid and high-quality decision making, plus ensuring that inclusion remains a key focus for the business. Actions taken during 2022 on talent and staffing saw a significant improvement in scores in these particular areas. These areas will remain a priority for 2023. Journey to Tomorrow People engagement Our approach to responsible business Creating a great place to work At IHG, we foster a culture of open and honest engagement and feedback through a range of forums, including our engagement survey, management-led performance updates and a designated NonExecutive Director who oversees workforce engagement. These forums allow us to talk to employees about IHG’s performance, key metrics, values, and diversity, equity and inclusion initiatives. 20 IHG Responsible Business Report 2022 For our hotels, Journey to GM (our new General Manager talent acceleration programme) aims to provide a pipeline of talent that both matches our growth ambitions and fulfils the aspirations of our employees wishing to build long and successful careers at IHG. In its first year, we saw 10 Journey to GM participants move into their first General Manager role across our EMEAA and Americas regions. We also continued to develop our hotel talent management system to provide us with greater insights into the talent we have and the critical gaps we need to fill. Attracting talent Reward culture IHG’s reward strategy aims to attract, retain, motivate and engage top talent. It is supported by a robust governance approach that ensures our reward and recognition practices are fair and consistent across our employee and colleague population, regardless of gender and other aspects of diversity, and there is alignment between the wider direct workforce and executive remuneration. Recognition is a key element of the IHG reward approach. This year, we were pleased to relaunch our Bravo! scheme, which allows colleagues to recognise their teams and individuals for their great work, support and leadership. We’ve also made it easier for colleagues to redeem their Bravo! awards against IHG One Rewards points by lowering the redemption cost, which has seen us align our recognition scheme with our core business in an exciting and attractive way. Investing in our HR technoglogy and learning In 2022, we invested in our core HR and learning technology platforms and our learning offer. These areas are critical to creating the engaging, high-performance culture we champion at IHG, each providing the tools and resources we need to be successful. Delivering a more streamlined, intuitive user experience for employees and colleagues, our HR system features self-service capabilities to enable line managers to initiate a range of core HR transactions themselves. The new platform also provides an end-to-end onboarding experience and consolidates HR support into one easy-tonavigate portal. Our new learning platform will provide our corporate offices, company-managed and franchise hotels with access to flexible training in a way that enables people to address specific needs and personalise their learning experience to strengthen opportunities for career development and growth. The Colleague Share Plan is available to around 96% of our corporate employees below the senior/mid-management level (who receive LTIP and/or Restricted Stock Unit awards). Participation in the 2022 cycle was 53% of the eligible population. The 2020 plan cycle has now vested, and the company awarded matching shares to more than 2,000 participating colleagues. Appendix The majority of people who work at