sustainability in management, business,

1. Sustainability Management
Simulation:
Net Zero
Debrief Slides
HBP# FO0009

2. Note to Instructors
2

3. Recap of Results
Consumption Emissions Emissions
3
Electricity
Consumption and
Solar Production
Annual CO2e
Emissions vs. Final
Year Target
Cumulative
Emissions vs Carbon
Budget
• How did electricity consumption (and production) develop over time?
• Review percentage reduction in final year emissions compared to base year
• What percentage of total carbon budget was used?
• Did revenues and profits increase?
• Notice that emissions become more difficult to achieve over time. Why is
that the case? Sustainability Management Simulation: Net Zero - TR

4. Analysis of Development of Consumption
and Emissions by Source
4
• Which types of consumption and sources of emissions were
relatively easy or difficult to reduce?
• Importance of Water, Waste, Food, Purchasing relative to
Electricity
Sustainability Management Simulation: Net Zero - TR
Rooms (Airco & Heating)
Rooms (Other)
Gym
Common Areas
Restaurants
Laundry
Electricity
Petrol
Water
Waste
Food
Purchasing
Energy Consumption (KwH)
(Base Year)
Emissions (CO2e)
(Base Year)
Note: Data in charts are for default values of hotel located in New York. The hotel has a different mix of emissions in London and Singapore, as a
result of different emission factors.

5. Developments of Emissions by Scope
How did the hotel’s emissions develop by
Scope?
• Scope 1: Emissions resulting from on-
site activity
• Reduce to zero if Electric Vehicles
are purchased (Initiative E3)
• Scope 2: Emission arising from purchased
electricity
• Major source of emission reductions
• Scope 3: Emissions that result from
activities in the wider value chain of
the organization
• Initiatives in Purchasing impact
Scope 3 emissions
• Did Scope 3 emissions temporarily
increase as a result of any
initiatives? For example: 5
Sustainability Management Simulation: Net Zero - TR

6. Analysis of Decisions: Energy
6
 Energy consumption from grid = total energy consumption – solar
production
 Since energy is the largest source of emissions, it is also the
largest opportunity for emissions reduction
 Some initiatives (e.g. solar panels, LED lighting, Electric
Vehicles) require purchases that initially increase Scope 3
emissions
 Electricity generating gym equipment is a “gimmick”, with very
little real impact
 Are there any additional initiatives that could be taken but were
Sustainability Management Simulation: Net Zero - TR
High impact initiatives:
 E1: Solar rooftop installation
 E2: LED lighting
 E3: Purchase Electric Vehicles
 E5: Upgrade air conditioning
 E6: Insulate windows

7. Analysis of Decisions: Purchasing
7
 Purchasing includes many initiatives available with a medium
impact on emissions (Scope 3)
 Some initiatives don’t reduce emissions by much, but may be
worthwhile for other reasons (e.g. P10: Eliminate plastic
bottles)
 Are there any additional initiatives that could be taken but were
not available? Sustainability Management Simulation: Net Zero - TR
High impact initiatives:
 P1: Install water efficient appliances
Medium impact initiatives:
 P2: Refillable soap and shampoo bottles
 P3: Purchase organic cotton
 P4: Purchase low carbon furniture
 P6: Expand vegetarian menu at restaurants
 P8: Serve organic food in restaurants
 P9: Low carbon carpets

8. Analysis of Decisions: Management
8
 Some initiatives don’t reduce emissions by much, but may be worthwhile for
other reasons (e.g. M9: Sustainability Report or M10: Get sustainability
rating)
 M7: Free parking and charging for Electric Vehicles actually increases
emissions of the hotel, due to Scope 3 measurement issues
 Are there any additional initiatives that could be taken but were not
available? Sustainability Management Simulation: Net Zero - TR
High impact initiatives:
 M1: Spending on staff environmental awareness training
 M2: Spending on guest environmental awareness communication
 M3: Recruit Sustainability Officer
 M8: Adjust temperature in lobby and corridors
Medium impact initiatives:
 M4: Food waste composting
 M5: Recycling bins in guest rooms
 M6: Go paperless
 M11: Electronics recycling program

9. Analysis of Decisions: Management – M1:
Spending on Staff Training and M2:
Guest Communication
9
 Spending on staff training has a greater impact on behavior than on guest
communication
 The impact of spending in one year only partly carries over to future years
 Impact of spending on guest communication stays longer than for spending on staff
training
 Staff training needs to be continuously reinforced
 Guest communication includes signs for guests, information on website, etc.
(more durable)
 Diminishing marginal returns from spending in one year
 After spending $100,000 on either staff training or guest communication in
Sustainability Management Simulation: Net Zero - TR
 Spending on staff environmental awareness
training and guest environmental awareness
communication is required each year to
impact behavior of staff and guests
 Reduces energy and water consumption, and
waste generation

10. Analysis of Decisions: Management – M3:
The Sustainability Officer
10
 Sustainability Officer supports the General Manager in achievement
of sustainability goals
 Recruiting the Sustainability Officer early in the simulation is
beneficial, but targets can also be achieved without one
 Sustainability Officer identifies one high impact and one low-impact
initiative:
 P7: Outsource laundry (high impact)
 M10: Get sustainability rating (low impact)
 Therefore, management still needs to evaluate and make final
decision on proposals from the Sustainability Officer
Sustainability Management Simulation: Net Zero - TR
Impact of the Sustainability Officer:
• Increases effectiveness of spending on staff training and guest
communication
• Reduces emissions from Purchasing
• Makes two initiatives available that are not available to hotels
without a Sustainability Officer

11. Financial Performance (1)
11
Sustainability Management Simulation: Net Zero - TR
Impact on costs:
• Reduction in electricity costs as a result of energy saving
measures
• Investment in solar pays off in any location, but more in
Singapore than in London and New York
• Reduction in other costs (water)
• Increase in costs as result of staff training & guest
communication
• Payback through reduced energy and water consumption
• Increases in costs as a result of sustainable purchasing
decisions in some instances
Income
Statement
Operating Profit

12. Financial Performance (2)
12
Sustainability Management Simulation: Net Zero - TR
Impact on revenues:
• Do customers take sustainability characteristics of a supplier in
consideration when purchasing?
• Corporate customers
• Individual customers
• Restaurant revenues are positively impacted by menu changes
• Vegetarian and organic items
• Which sustainability initiatives most likely have a positive
impact on revenues?
• Energy: Solar panels, Electric Vehicles
• Purchasing: Organic cotton
• Management: Sustainability report, sustainability rating
• Free parking for EVs increases REVPAR slightly but reduces
parking revenues
• Which sustainability initiatives most likely have a positive
impact on revenues?
• Removal of minibars and introduction of refillable soap have
small negative impact on guest satisfaction and REVPAR
Income
Statement
Operating Profit

13. The Role of Location
New York London Singapore
13
• Local conditions impact emissions and effectiveness of initiatives
• Solar panels are most effective in Singapore, followed by New York,
then London
• Water consumption has highest emissions in Singapore, followed by
New York, then London
• Therefore, installing solar panels and initiatives that reduce
water consumption have greatest impact in Singapore
• London has lowest emissions per KwH from grid electricity, making
initiatives not related to energy (Waste, Food, Purchasing)
relatively more impactful
• Facilitator may have adjusted emission factors for the class (incl.
Sustainability Management Simulation: Net Zero - TR
My Town

14. Model Overview
Activities
Electricity consumptions airco / heating rooms (Kwh)
Electricity consumptions rooms other (lighting, tv, fridge) (Kwh)
Electricity consumption own vehicles (Kwh)
Electricity consumption gym (Kwh)
Electricity consumption other (Kwh) common areas etc
Electricity consumption restaurants
Petrol consumption own vehicles (L)
Water consumption (L) in rooms
Water consumption (L) other, incl. restaurant
Waste from hotel rooms (kg)
Waste from restaurant and other (kg)
Meat and other food consumption in restaurant (kg)
Laundry kg per room
Water (L) per kg of laundry
Electricity (kwH) per kg of laundry
Water consumption (L) from laundry
Electricity consumption laundry (Kwh) inhouse (per day)
Renewable energy production (KwH) (annual)
CO2e kg from other purchases (annual)
X Volume for the year (KwH, L, KG)
X Emission Factor (CO2e per KwH, L, KG)
= Emissions for the year (CO2e)
Impact of selected initiatives
Note: For electricity consumption:
Consumption from grid = Total consumption – solar electricity production onsite
Emissions
Costs
RevPar (Revenues)

15. Critical Takeaways
15
• Challenges and opportunities associated with emission reduction efforts
• Business case for sustainability strategy (impact on costs, revenues,
risk)
• Importance of taking continuous action
• Importance of selection and prioritization of the right initiatives
• Role of employees, customers and suppliers in reducing emissions
• Importance of measurement, target setting and modeling
• Other?
Sustainability Management Simulation: Net Zero - TR

16. Applicability to other companies
16
• Importance of establishing baseline emissions (CO2 and other greenhouse
gases)
• Scope 1, 2, 3
• Set greenhouse gas emission reduction target (in line with Paris Agreement
objectives)
• Medium & long term targets
• Identify potential initiatives and estimate their impact on corporate
emissions, costs, revenues and risk
• Model impact of initiatives
• Confirm and communicate emission reduction targets
• Implement initiatives
Sustainability Management Simulation: Net Zero - TR