Sustainable Tourism

The tourism industry is the biggest economic sector in the Maldives. Prior to the global covid-19 pandemic, tourism sector contributed over 20% to the nation’s GDP, recording a total of 1.67 international arrivals in the year 2019, which is a significant growth compared to the recorded 0.2 million visitors thirty years ago. On a global scale, tourism industry is one of the major economic sectors in the world, contributing to approximately 10% of global employment.

With its innumerous contributions to the world economy and employment, the industry casts a long shadow on our planet, responsible for a staggering 8% of greenhouse gas emissions. The resultant carbon footprint weaves a tale of climatic adversity that particularly puts small island nations at risk. The Maldives, a paradise of atolls and blue waters, threatened by the rising seas, could become uninhabitable by the mid-21st century due to global warming. The tourism industry, which has long been its lifeblood, now stands at a crossroads.

A ray of light towards sustainability in Maldives

In light of the growing awareness among the general public regarding social and environmental issues, the tourism and hospitality sector faces increasing scrutiny to embrace and implement sustainability initiatives in their operations. To showcase the industry's commitment to sustainable practices, it is crucial to openly communicate their journey and advancements to external stakeholders by issuing comprehensive reports on their environmental, social, and governance (ESG) performance.

The Maldives has embarked on its initial journey toward embracing sustainable tourism practices nationwide, with a strong commitment to reducing the carbon footprint.. The Fifth Tourism Masterplan developed by the Ministry of Tourism from 2023 to 2027 highlights the goal of establishing sustainable tourism, emphasizing with setting the vision of the Maldives becoming a world leader in sustainable tourism. In the realm of reporting, sustainability reporting has been made mandatory for all listed companies in the Maldives effective from 1st January 2023.

Delving deeper into the hospitality industry reveals that resorts based in Maldives such as Vilemendhoo Island Resort & Spa, Hurawalhi Island Resort and Robinson Maldives have published sustainability reports for the year 2022 while other resorts such as Soneva have been releasing sustainability reports since as far back as 2018. These actions underscore the industry's commitment to transparency and sustainable practices.

Sustainability reporting standards

At present, there is no mandatory model or framework that must be adhered to when preparing sustainability reports. Nevertheless, various accounting standard-setting bodies have issued exposure drafts and standards, each offering a distinctive approach and covering an extensive array of sustainability-related subjects.

In a significant development, the International Financial Reporting Standards (IFRS) introduced two sustainability reporting standards in late June 2023: IFRS S1, outlining General Requirements for the Disclosure of Sustainability-Related Financial Information, and S2, focusing on Climate-Related Disclosures. The two standards provide information about an entity’s sustainability related risks and opportunities which are relevant to the stakeholders for decision making process.

IFRS S1 and S2

IFRS S1 and S2 are built upon four fundamental conceptual pillars in reporting: fair presentation, materiality, the reporting entity, and interconnected information. Furthermore, both standards require disclosure in four key areas:

1. Governance: the governance processes, controls, and procedures the entity uses to monitor, manage, and oversee the risks and opportunities.
2. Strategy: the approach the entity uses to manage risks and opportunities.
3. Risk Management: the processes the entity uses to identify, assess, prioritize, and monitor risks and opportunities.
4. Metrics and Targets: an entity’s performance in relation to the risks and opportunities, including progress towards any targets the entity has set or is required to meet by law or regulation.

Sustainability reports prepared in compliance with these standards must be reported at the same time as the entity’s related financial statements for the same reporting period, while making an explicit and unreserved statement of compliance.

In a world increasingly focused on eco-conscious choices, embracing sustainability reporting is not just a commitment to preserving our natural and cultural heritage; it is also a strategic move to attract and retain travelers who seek environmentally friendly experiences. Cultivating a sustainable future for the tourism sector is both a responsibility and an opportunity. Utilizing frameworks such as IFRS S1 and S2 can be the compass guiding us towards a greener, more responsible industry. Let's recognize that sustainability is not a trend; it is the future, and it is time for the tourism industry to lead the way.