Determinants of environmental certification in Portuguese hotel companies

A major topic of tourism research is sustainability. It is a major issue of interest for all tourism actors in tourism supply and a major concern for tourism demand. Our planet faces enormous economic, social and environmental challenges. The 17 Sustainable Development Goals (SDG) of the 2030 Agenda for Sustainable Development were put into practice by almost all countries in the United Nations. These SDGs define the priorities and aspirations for global sustainable development by 2030. The SDGs were set worldwide for governments, enterprises and communities to eliminate poverty and create opportunity and dignity for all. The SDGs are established in five main areas: people, planet, prosperity, peace and partnerships. According to the United Nations Global Compact, implementing these main goals will unite all global stakeholders to end extreme poverty, fight inequality and injustice, and protect the planet (United Nations Environment Programme, 2022). Tourism activity encompasses several sectors with evident impacts on the economies of countries. Hotel accommodation is one of the most important sectors, accounting for several positive and negative economic, social and environmental impacts. General concern about the environment and climate change leads hotels to try to limit the negative impacts of their daily production processes for several reasons, including marketing and better cost control. There are a plethora of studies related to marketing sustainability and environmental strategy (Chandran & Bhattacharya, 2019; Choi et al., 2015; Dodds & Holmes, 2016; Han et al., 2018; Preziosi et al., 2019; Santos et al., 2019; Ting et al., 2019) and financial performance related to environmental strategy (Carmona-Moreno et al., 2004; Cavero-Rubio & Amorós-Martínez, 2020; Claver-Cortés et al., 2007; Gil et al., 2001; Segarra-Oña et al., 2012; Singal, 2014).

Concerning marketing sustainability, hotel certification is crucial in communicating production and management standards. According to Jones et al. (2014), sustainable commitments and achievements can establish a reputation among clients and become a source of competitive advantage. However, Geerts (2014) concluded after interviewing 21 London hoteliers that the effect of certifications on profitability was uncertain because certifications were not providing guests with more accurate information and because of limited communication of certifications by hotels. The author also concluded that, for hotels beginning to implement sustainability practices, certification schemes could provide a structured plan for implementation and expertise to use; however, as a promotional tool, certifications could not be as effective as was often discussed in the existing literature.

Other contributions in the literature, like the one of Dodds and Holmes (2016), examined hotels with Green Key certification to assess the benefits of undertaking environmental practices. The study concludes that hotel managers participating in the Green Key certification programme believed that it allowed them to attract new and retain old customers. Likewise, Han et al. (2018) studied green hotel visitors in Vietnam and examined guest participation in green practices and loyalty by considering the moderating effect of environmental concern. The authors concluded that increasing environmental concern ultimately triggers guests’ active participation in green practices and their loyalty to green hotels. Several studies in the literature conclude that marketing communication is critical to obtaining the best certification results. Garay et al. (2017) studied 408 hospitality enterprises in Catalonia (Spain). They identified the key motivations for introducing sustainability practices: altruistic (related to environment protection 83.3%, lifestyle 63.1% and commitment to society 56.3%), and business-related (cost reduction 65.4%; image and marketing improvements 43.2%).

Preziosi et al. (2019, p. 10) studied how environmental practices and communication could play an important role in guest loyalty, examining EU-Ecolabel certification in Portuguese hotels and concluding that ‘when guests are able to relate themselves to the hotel approach and motivations regarding the environment, this will more likely create a relation leading to guest loyalty toward green hotels'. Moreover, the authors conclude that, mostly by emphasising genuine care for the environment rather than an effort to reduce costs and gain competitive advantage, communication plays a role in this identification process between the hotel and the guest, improving loyalty. Santos et al. (2019) emphasise this thinking and advise companies to move beyond what they call the rational appeal. This rational appeal should be enough for a niche tourist market that already engages in sustainable practices in daily routines and tourism-related choices. The authors suggest that hotel managers targeting other tourist markets should use a mixed appeal based on videos and other sensorial stimuli rather than merely offering proof of environmental certifications or awards.

Chen et al. (2018) established a comprehensive theoretical framework for examining learning effects in green and conventionally managed hotels. The authors concluded, among other aspects, that the learning efforts of green management can improve cost saving, employee loyalty, and customer retention. Besides, green management's learning efforts helped meet short-term operational targets. Indeed, hotels with green management can establish better networks with other stakeholders and exhibit improved social responsibility and good reputations.

Proactive environmental strategies in the hotel and tourism industry focus on sustainable and environmentally responsible practices to minimise negative environmental impacts and enhance long-term sustainability. These strategies have gained significant attention in recent years due to growing environmental concerns and changing consumer preferences. Concerning what is already known about the subject of proactive environmental strategies in hotel and tourism, there are some main areas of action like energy efficiency and conservation, water conservation, waste reduction and recycling, green building and certification, local sourcing and sustainable food practices, transportation initiatives, education and guest engagement, biodiversity and habitat preservation, certification and ecolabels, government regulations, cost savings and brand reputation and resilience to climate change. We should refer to the work of Elkhwesky (2022), who undertook a quite complete review of proactive environmental strategies in the hospitality and tourism industries for the last 26 years and made important conclusions. The author refers to the paucity of research on proactive environmental strategies in hospitality and tourism and presents several important lines of research. Also, following a major and systematic literature review, Elkhwesky (2022) lists the best proactive environmental strategies in hospitality and tourism: energy saving, waste management, providing environmental training, rewarding environmental initiatives and establishing environmental goals and plans, among many others. Additionally, Jiang et al. (2021) studied how managerial ties (informal personal relations) could lead to adopting proactive environmental strategies. The authors concluded that political ties hinder a hotel's adoption of proactive environmental practices while business ties enable them.

Concerning environmental certification, it is referred to in the literature as a proactive environmental strategy (Cembruch-Nowakowski, 2020; Elkhwesky, 2022; Schott, 2006). The present study intends to contribute to the literature on certification as a proactive environmental strategy. Certification increases the company's competitiveness concerning quality and image, promoting positive business activities and social responsibility. On the consumer side, ecological certification facilitates decision-making processes regarding choosing a supplier of environmentally friendly products and services. Moreover, eco-certification or ecolabelling increases the availability of information about implemented ecological activities. According to Schott (2006), ecolabels are a proactive mechanism to create a more sustainable future.

The choice of ecolabelling adoption is explained in the study of Leroux and Pupion (2018), who account for risk and the ability to enact ecolabelling as the two dimensions of entrepreneurial orientation that can explain this choice. The institutional pressure explained by a tendency to cope with competitors can also explain ecolabelling adoption. The authors also studied the risk of reversing the ecolabelling process. They advise organisations that have not yet adopted the certification that the intention to reverse the ecolabelling process depends on hotel sector normative pressures and entrepreneurial characteristics, like risk-taking or the fear of bureaucracy. Moreover, for the case of certificated hotels, the authors point out the main reason for abandoning the certification: the complexity of the certification system. On the other hand, a positive attitude towards environmental logic and pressures of the reference group would help maintain the eco-label adoption. Cembruch-Nowakowski (2020) refers to the different dimensions of the benefits of using Eco-Certification and Ecolabels: environmental, socio-cultural, organisational and economic. However, the author points out the main benefit of using Eco-certification as the ‘contribution to the harmonisation of pro-environmental and pro-social activities of various entities, and providing support to the sustainable development in the region’ (Cembruch-Nowakowski, 2020, p. 311).

According to the International Organization for Standardization (2023), standards are the collected wisdom of people with expertise in their subject matter. These people know the needs of the organisations they represent, and environmental management standards help reduce environmental impacts and waste.

Certification in the environmental domain refers to a rigorous procedure that verifies and assesses whether a given product, service or process complies with specific environmental standards or requirements. Certificates are generally issued by accredited institutions or entities of general trust, totally independent of the entities requesting a certificate (Koraus & Rusko, 2013). The International Organization for Standardization (ISO) has defined three general types of voluntary labels. Type I labels are certified ecolabels. There is an independent and voluntary programme for these labels based on several criteria. This programme assigns labels to products and fosters their differentiation according to their environmental performance. Certification is associated with the concepts of transparency and credibility. Type II labels are called environmental self-declarations, as they appear as declarations developed by manufacturers to transmit environmental information about their products or services.

Type III labels are environmental product declarations (EPD) and have standardised information about a product or service. This information appears through diagrams with critical environmental indicators, such as waste production, global warming and others (Fet & Skaar, 2006; Minkov et al., 2020). Types I and III are, in fact, ecolabels, as they are awarded to entities that meet the requirements of the multicriteria procedure carried out by authorities that assess and quantify the environmental data of a product using the life cycle approach (Minkov et al., 2020).

Both eco-certificates and ecolabels can be international in nature, e.g., ISO 14001 or Green Globe Certificate, or they can be recognised only locally, e.g., ‘Nature's Best Sweden’ (Cembruch-Nowakowski, 2020). The author also notes that eco-certification or ecolabelling processes may involve procedures accredited by a state institution. Still, they may also be initiated and conducted by non-profit organisations, associations, foundations or other entities. Al-Aomar and Hussain (2017) argue that the hotel supply chain is open to green practices and that the strong competition among hotel supply chains has led hotel managers to believe that the effective adoption of green practices would automatically support growth and long-term economic sustainability. Also, Segarra-Oña et al. (2012) conclude that the results of proactive environmental strategies, namely implementing ISO 14001 in the hotel sector, will enhance economic returns, total income and net sales.

Portuguese hotel certification encompasses several environmental labels that can be identified in the Portuguese National Tourism Registry (RNT) (https://rnt.turismodeportugal.pt) for each hotel establishment: ISO 14001, Green Key and the EU Ecolabel. According to the International Organization for Standardization (2023), ISO 14001:2015, in its current version, specifies the requirements for an environmental management system that an organisation can use to enhance its environmental performance. The main objectives of this norm are for organisations to systematically manage their environmental responsibilities, contributing to the environmental pillar of sustainability, and create value for the environment, the organisation, and interested parties.

The Green Key programme is an international award coordinated by the Foundation for Environmental Education (FEE) developed in Portugal by the Associação Bandeira Azul da Europa (ABAE), since 2007. According to Turismo de Portugal (2023), the Green Key certificate aims to promote Sustainable Tourism by recognising tourist facilities (accommodation, conference centres, restaurants, among others) that implement good environmental and social practices, value environmental management in their establishments and promote environmental education for sustainability. Following the global trend toward green marketing, the programme attracts the national and international tourist market and motivates the staff towards the objectives defined by the establishment (Turismo de Portugal, 2023).

The EU Ecolabel is a voluntary European instrument applicable to products and services that aims to reduce the negative impact of production and consumption on the environment, health, climate and natural resources, promoting products with high environmental performance (Turismo de Portugal, 2023). According to Turismo de Portugal, the EU Ecolabel is a relevant element of differentiation for companies with several advantages: the guarantee to customers and consumers that a product meets strict environmental criteria, which could be decisive for their choice; third-party verification and recognition in all EU countries; reinforcing reputation, showing a high degree of social responsibility.

The present study is innovative since it is the first to address nationwide the determinants of certification of hotel establishments in Portugal. We should refer to the work of Preziosi et al. (2019), who examined the EU Eco-label in Portuguese hotels and concluded about environmental practices and communication on guest loyalty. We should also refer to the work of Heras-Saizarbitoria et al. (2020), who studied the environmental best practices and performance benchmarks among EMAS (Eco-management and Audit Scheme from the European Commission) certified organisations in several countries, including Portugal. The present work intends to fill a gap in the literature since it includes the study of all hotel establishments in Portugal, trying to assess which factors determine the certification of hotels in Portugal. There are some studies for the Portuguese case on ISO certification (Cândido et al., 2021; Esgarrancho & Cândido, 2020; Santos et al., 2016), but they do not address both the environmental certifications and hotel sector.

The literature review presented the theoretical background to identify which determinants can explain hotel environmental certification, studying the case of companies that manage hotels in Portugal. In the present study, we will consider the size or dimension of hotel companies, hotel classification, hotel affiliation and the financial performance of hotel companies to explore the determinants of certification. Some studies in the literature allow us to identify these variables. Claver-Cortés et al. (2007) establish a relationship between cost reduction and certification, and Darnall et al. (2010) explore the relationship between company size and certification and conclude that smaller firms adopt fewer proactive environmental practices than their larger counterparts. Concerning other determinants like hotel classification and affiliation, Sanchez-Ollero et al. (2016) establish a positive relationship between hotel classification and environmental proactivity. In fact, according to the authors, the hotel category and affiliation increase the likelihood of hotels being considered environmentally proactive. O'Neill and Carlbäck (2011) also discuss the relationship between affiliation and environmental certification since affiliated hotels develop common management strategies (human resources, marketing, procurement) for the hotel chain and environmental certification programmes.

Considering the relationship between financial performance and environmental certification, we compute return on sales (ROS) to assess the study's financial performance dimension. ROS is considered one of the main performance measures used to evaluate the financial performance of hotel companies by Chen (2011) and Pnevmatikoudi and Stavrinoudis (2016), who classified it as a return on invested capital ratio. More recent studies (Martins et al., 2021; Martins et al., 2019) also used these variables to assess the performance of branded and non-branded hotel companies in Portugal. Hence, the present study establishes four hypotheses: H1 – Brand affiliation explains environmental certification; H2 – The hotel classification explains environmental certification; H3 – The hotel dimension explains the environmental certification; and H4 – Financial performance explains environmental certification.