MILENA PERSIC, PhD, full professor

SANDRA JANKOVIC, PhD, associate professor

DUBRAVKA VLAŠIĆ MSc, Assistant

VANJA VEJZAGIĆ, Assistant

Faculty of Tourism and Hospitality Management Opatija

University of Rijeka, Croatia

Primorska 42, 51410 Opatija, Croatia

INTERNAL AUDIT ENDENVIRONMENTAL

HOTEL MANAGEMENT REQUIREMENTS

Environmental management system is an important part of hotel management system which allows the development, implementation and maintenance of environmental policy. Internal audit, as an independent, objective and consulting oriented activity is designed to add value and improve hotel operations. It helps to accomplish hotel objectives by bringing systematic and disciplined approach and improves the effectiveness of management and control. Hotel management requires information provided by environmental auditing, about systematic, periodic, documented and objective verification of processes connected with protecting and improving hotel environment. Environmental auditing has to be based on the principles of Environmental Management and Audit Scheme (EMAS), which is drawn up and ratified by the hotel executive management. Environmental audit includes the process of setting standards and monitoring of their application. The main task of internal environmental hotel audit is continuous improvement of environmental performance, protection and improvement of the environment and has to be supported by the entire hotel personnel. The research of the paper will be focused on the role of internal audit in recognising and measuring hotel environmental costs.

Introduction

Environmental concerns have been increasing in tourism and hospitality industry. Eco-efficiency in sustainable economic development is based on the application of preventive environmental strategies with respect to hotel processes, products and services, local tourism industry and other local authorities on tourist destination level. It is very important to emphasize that eco-hotel can be efficient only in eco-destination environment. When a tourist destination over-exploits its environmental resources it can become unattractive and lose its popularity to those places where the environment has not been compromised. Hotel management actions on the legal regulation and sustainable development principles to achieve targeted environmental management goalswill be presented. Environmental quality is crucial forquality product in the eyes of the tourist.From an organizational point of view, the only sensible response to the growing complexity of the environmental agenda in the tourism and hospitality industry is to work towards the development of a fully integrated environmental management system (EMS).

EMS is based on the belief that “man and nature must live in harmony”, and requires hotels and other enterprises in tourist destinationto be responsible towards the environment. EMS presents organizational structure, responsibilities, practices, procedures, processes and resources for determining and implementing environmental standards, which are stressing in last decade of the 20th century and the first decade of the 21st century, on the importance of the environmental protection and implementation of sustainable development principles in tourism and hospitality industry. An EMS is management system that provides mechanism for hotel and destination management to operate in an environmentally responsible manner, anticipate and meet growing environmental performance expectations, and ensure ongoing compliance with regulatory and legislative requirements. At the same time ithelps businesses reduce costs, enhance guest comfort, its own growth and prosperity under a climate of resource constraints and environmental responsibility.

The ISO series 14000ff is the initial standard for implementing the Eco-Management and Audit Scheme (EMAS), asa total strategic approach to the organization’s activities and voluntary initiative designed to improve companies' environmental performance. It is the areaof systematic examination of interactions between any hotel business operationand its surroundings, which includes all emissions to air, land and water, legal constraints and effects on the neighboring community, landscape and ecology. Environmental audit includes public perception of the operating company in the local area, and does not stop at compliance with legislation. Environmental audit is based on EMAS, ISO 14001, BS7750 and practice of independent attestation of environmental organization, and include environmental impact assessment, environmental inquiry, environmental review, monitoring and surveillance and environmental investigation. Internal hotel eco-audit, as a part of official internal audit, should be based on EMAS instrument and information, because atpresent tourism and hospitality industry has to be environmentally and economically sustainable.

  1. Eco-management and Audit Scheme (EMAS)

The EMAS (Eco-Management and Audit Scheme)[1]is a voluntary initiative designed to improve companies’ environmental performance whose aim is to recognize and reward organizations that go beyond minimum legal compliance and continuously improve their environmental performance. It also requires participating organizations to produce a public environmental statement that reports on their environmental performance. EMAS is strongly supported by Government and the environmental regulators, and participating organizationsare recognized as strongly committed to the environment and therefore improve their economic competitiveness. EMAS could be the competitive edge that the tourist destination management is seeking. Before ahotel or organization in tourist destination can use the EMAS logo[2], and make it publicly available it must comply the environmental review, install EMS, audit procedure and the environmental statements approved by an accredited to the EMAS Competent Body for registration (figure 1).

Figure 1: Eco-management and audit scheme

Source:

In developingthe Environmental Audit and Management scheme two approaches can be used: the iterative (trial-by-error), and direct one (which follows procedures for adopting the current standards of EMAS and ISO 14000 series). Organizations differ from each other and therefore should decide according to their possibilities, specifics and needs.

Achieving environmental excellence means defining current position of the company (object of auditing), defining the future (strategy), the means of achieving the future (which actions to take) defining the realization (through monitoring and managing the process) and reporting of it. Implementing and Environmental management system (EMS) on a daily basis is of a great importance. Environmental auditing and EMS have their visible manifestation in series of guidelines that can be considered good business management. Some countries have national guidelines and others accept international and generic standards of which British Standard Institution BS7750, the EU Eco-Management and Audit Scheme and International Organization for Standardization (ISO 14000 series). ISO 14000 refers to a series of environmental management standards that is voluntary and based on international consensus. The ISO 14001 standard is designed to encourage any organization to establish effective environmental systemto achieve continual improvement of environmental performance and establish as a minimum, regulatory and legislative compliance. The ISO 14001 standard is the only standard in the ISO 14000 series against which thehotel can become certified, and it is the real way to take the EMAS registrations[3] for which following steps need to be introduced:[4]

  • Conduct an environmental review considering all environmental aspects of the organization’s activities, products and services, methods to assess these, its legal and regulatory framework and existing environmental management practices and procedures.
  • In the light of the review results establish an effective EMS aimed at achieving the organization’s environmental policy defined by the top management. The management system needs to set responsibilities, objectives, means, operational procedures, training needs, monitoring and communication systems.
  • Carry out an environmental audit assessing in particular the management system in place and conformity with the organization’s policy and program, as well as compliance with relevant environmental regulatory requirements.
  • Provide a statement of its environmental performance which lays down the results achieved against the environmental objectives and the future steps to be undertaken in order to continuously improve the organization’s environmental performance.

At EU level tourism and hospitality industry organizationsare obligated to introduce EMAS instruments for continual improvement of environmental performance. EMAS registered organizations are legally compliant, run an environmental management system (EMS) and report on their environmental performance through the publication of an independently verified environmental statement. They are recognized by the EMAS logo, which guarantees the reliability of the information provided. By adopting sustainable practices, companies can gain competitiveness, increase their market share, and boost shareholder value. The growing demand for tourism green products has created major new markets in which sharp-eyed eco-hotels and other organizations are reaping rewards.

At tourist destination level strategies and tools for practical and effective solution of sustainability have to be applied. This includes identification of the specific sustainable development topics from a business perspective, incorporation of the sustainability principlesinto everyday business activities (in real-life), marketpossibilities to business opportunities arising from sustainable development, banking and investment approach and fund the best model to working with NGOs and other lobby groups. Universities, schools and professional institutions that provide different education and training opportunities, for helping hotels and other institution to incorporate sustainability into their business strategies need to be involved at this level.

2. Environmental impacts in hotels

Initiatives designed to help management in tourism and hospitality to achieve greater efficiency, reduce costs, increase profits, and enhance guest comfort are recognised in theory and practice. International Hotel and Restaurant Association (IH&RA)[5]with the United Nations Environment Program (UNEP)[6]Conservation International[7], Green Globe21[8] and the International Tourism Partnership[9],assignthe environmental award for recognizing hospitality’s outstanding and proactive work to protect the environment since 1990 which is one of the first award programs to promote environmental awareness among hotels. The program recognizesefforts of both independent and corporate hotels, selecting a winner and runner-up in each category, honored at a special award ceremony at the IH&RA annual congress and included in periodical Best practice reports.

Figure 2: Hotel environmental aspects and impacts

Source: Based on Gray, R. Bebbington,J.: Accounting for the Environment, II Ed., Sage Publications, London. Thousand Oaks, New Delhi, 2003 , p. 94.

The most significant environmental aspects and impacts in tourism and hospitality industry are as follows:

  • Emission to air (gas emissions from the boiler plant, exhaust emissions from kitchens, potential leakage of refrigerant from chilled plant to the atmosphere, potential leakage of volatile chemicals e.g. thinner, plant, laundry chemicals containing ozone depleting substances etc.)
  • Water use and sewage discharge (cleaning processes in housekeeping department, operation of laundry machines, kitchen activities, engineering and building maintenance and water consumption in guestrooms, public area toilets and staff changing rooms).
  • Energy use (lighting and HVAC system, water pumps and swimming pool plant pumps operation, dishwashers and laundry machines, boiler plant and other energy intensive equipment).
  • General solid waste (waste paper, empty containers, food waste, packaging waste, timber waste, broken equipment and utensils, building waste and other consumables) connected with land contamination and use of landfill space (from guestrooms, offices, service outlets, kitchens, stores, engineering and building maintenance).
  • Noise emissions (HVAC system, bars and lounges, engineering and building maintenance activities, potential noise emissions by alarm systems)
  • Health risks (from chemicals and dangerous goods handling in housekeeping, laundry, stewarding and engineering departments, malfunction of equipment or fire in the hotel).

The most important task for eco-hotel is the process of introducing and developing an environmental culture, and practical action[10]which form the basis for developing environmental policy and overall strategy in waste management, energy and water conservation, water quality, product purchase, indoor air quality, external air emissions, noise, stored fuel polychlorinated biphenyl's (PCB's), pesticides and herbicides, hazardous materials, asbestos, etc.The process advocated is exemplary involving top-down commitment, wide communication and consultation, the appointment of a coordinator and working group and outlining an in-house program to build environmentalism into staff culture, raise awareness, build commitment, provide support, reward and recognize efforts, celebrate success and to take practical steps etc.

One of the most important aims of eco-hotel manager is to createenvironmental program and observe formidable influence which environmentally committed hotels may have upon the processes and products of the supply chain. Vital is, if the hotel makes such changes in the way it operates and reduces its impact on the environment. Register of significant environmental aspects[11] is an environmental tool to identify significant environmental aspects and their associated impacts in process of environmental performance continual improvement. For each hotel department or segmenta list of relevant activities and operations and with them associated environmental aspects and impacts, under normal and emergency situations must be used.

Good public relations are seen as one of the beneficial spin-offs to be gained, which will attract guests and induce competitors to raise their own game. A role in the community is advocated for committed hotels, which opens up a new agenda for community environmental action as part of the business function. Good ideas and exemplary behavior should be rewarded and communicated to others, and recognized as a process of change. Temporary eco-management is also obligated to implement TQM[12] system and rules, to be a part of eco-quality management, based on Deming model circle sequence (plan, do, check, improve) as a framework for successful EMS and EMAS, based on five main stages (environmental policy, planning, implementation and operation, checking and corrective action and management review)[13].

3. Hotel environmental audit procedures

The initialstep towards introducing audit methods in hospitality industry is to recognize significant environmental impacts andintroduce specific auditmethods to carry out the eco-qualitygap analysis. Specific environmental audit methods,based oncurrent operations and management practices, against requirements of ISO 14001 will be implemented. The main goal is to identify all the environmental aspects and impacts of the hotel in different departments and segments in order to control and improve significant environmental aspects. It can show to hotel management what is missing in the existing EMS elements, in order to comply with all ISO 14001 EMS standards (table 1).

Table 1: Cross-reference matrix of EMS documentation with ISO 14001 standard

Hotel Audit &
Environmental Management System Documentation: / Section number of ISO 14001 standard
(HEP= Hotel Environmental Procedures)
4
1 / 4
2 / 4
3
1 / 4
3
2 / 4
33 / 4
3
4 / 44
1 / 4
4
2 / 4
4
3 / 4
4
4 / 4
4
5 / 4
4
6 / 4
4
7 / 4
5
1 / 4
5
2 / 4
5
3 / 4
5
4 / 4
6
Environmental Policy / x
Environmental Management Guide / x / x / x / x / x / x
HEP-01 Environmental Policy / x / x / x
HEP-02 Environmental Aspect / x / x / x / x / x / x / x / x
HEP-03 Legal and Other Requirements / x / x / x / x
HEP-04 Environmental Objectives and Targets / x / x / x / x / x
HEP-05 Environmental Management Programs / x / x / x
HEP-06 Organizational Structure and Responsibility / x / x / x
HEP-07 Training, Awareness and Competence / x / x / x
HEP-08 Communication / x / x / x
HEP-09 Environmental Management System Documentation and Document Control / x / x / x / x / x
HEP-10 Operational Control / x / x / x / x / x
HEP-11 Emergency Preparedness and Response / x / x / x
HEP-12 Monitoring and Measurement / x / x / x / x
HEP-13 Non-conformance and Corrective and Preventive Action / x / x / x / x
HEP-14 Records / x / x / x
HEP-15 Environmental Management System Audit / x / x
HEP-16 Management Review / x / x
Operational Control Procedures / x / x / x / x / x
Environmental Objectives & Targets and Environmental Management Programs / x / x / x / x / x
Register of Significant Environmental Aspects / x / x / x / x / x / x / x / x
Register of Legal and Other Requirements / x / x / x / x
Initial Environmental Review Report / x
Environmental Records / x / x / x / x / x / x / x / x / x / x / x / x / x / x / x / x / x / x

Source: Burnett,J., Ho,B., Chan,A.: Hotel Generic Hong Kong - Environmental Management Guide in Environmental Management Manual for Hotels in Hong Kong, Department of Building Services Engineering, The Hong Kong Polytechnic University, Hong Kong, 2000. p.7

Hotel environmental procedures,as a part of EMS system[14] arebased on ISO 14001requirements andcan successfully be implemented in the hospitality industry.

Environmental audit is a systematic, documented, periodic and objective review by regulated entities of facility operations and practices related to meeting environmental requirements[15]. It is a step towards embedding environmental issues in organizational practices and a continuing essential element in managing and reporting on the environmental. Environmental audit as a part of environmental management programs, include structure, responsibilities, training, awareness, competence, communication, environmental management system documentation, document and operational control. It is connected with rules of emergency, preparedness, response, monitoring, measurement and non-conformance. Hotel environmental procedures follow the environmental auditing basic steps, recommended by the International Chamber of Commerce (ICC)[16]:

  1. pre-audit activities
  2. select an schedule facility to audit
  3. select audit team members
  4. contact facility and plan audit
  5. activities at site
  • step 1 : Identify and understand management control system
  • step 2 : Assess management control systems
  • step 3 : Gather audit evidence
  • step 4 : Evaluate audit findings
  • step 5 : Reporting finding to facility
  1. post-audit activities
  • Issue draft report
  • issue final report
  • action plan preparation and implementation
  • follow-up action plan

Environmental audit information are very important for management review, corrective and preventive action, and environmental development decision making. Internal audit has to be a part of EMS process that provides mechanism for the hotel to operate in an environmentally responsible manner, anticipate and meet growing environmental performance expectations, and ensure ongoing compliance with regulatory and legislative requirements in order to prevent and manage risks that arise from the environmental issues. EMS also allows the hotel to address, control and improve short and long term impacts of its activities, products and services on the environment. Documentation encompasses have to be based onenvironmental policy to provide four levels control, and include: Environmental management guide, Hotel environmental procedures, Operational control procedures and Environmental records.